HSBC raises 2013 copper price outlook on tighter market



REUTERS

Published — Wednesday 30 January 2013

Last update 30 January 2013 12:26 am

| نسخة PDF Print News | A A

LONDON: HSBC has raised its 2013 copper price forecast, saying it expects positive sentiment to drive prices for the metal in a structurally balanced market.
The bank lifted its 2013 forecast for the average cash copper price to $ 8,000 per ton from $ 7,500 to reflect the metal’s relatively good start to the year.
“Copper, perennially described as fundamentally tight, actually finished 2012 posting a gain in inventories,” analyst Andrew Keen said in a note to clients.
“This market remains balanced in our view, and this is enough to keep prices high when sentiment is good.”
Benchmark three month copper futures on the London Metal Exchange (LME) were at $ 8,066 a ton at around 1000 GMT yesterday.
HSBC raised its aluminum price forecast by about 5 percent to $ 2,250 per ton, but maintained its view that prices would remain around this level due to a continued structural surplus.
“It would not take a revolution in the rate of global demand growth to fix the structural surplus in aluminum,” analyst Keen said.
Keen expects aluminum to be in a 5.9 million tons surplus over the 2012-2016 period, with the excess absorbed by a compound annual growth rate (CAGR) of 6.2 percent for global demand, and the market could be brought back into balance in one good year of demand.
Three months aluminum on the LME was at $ 2,056 a ton yesterday.
The bank also raised its iron ore price forecasts for this year to $ 123 per ton from $ 105 earlier, saying that the market was probably driven by seasonal restocking by Chinese mills and short-term concerns over supply.
The bank said, however, that it believes the lack of marginal cost support will see weakness for iron ore later in 2013.
Chile’s state copper commission, Cochilco, earlier said Chile is seen producing 5.596
million tons of copper this year, up 3 percent from 2012 levels, as heavy investment in mines in the world’s No. 1 producer pays off.
Cochilco said a pick-up at state copper producer Codelco’s century-old Chuquicamata deposit and the launch of its Ministro Hales mine at the end of the year will help lift
output of the metal, which is used in construction and power generation and transmission.
But analysts have warned that several factors — deteriorating ore grades, delays to key energy and mining projects, and operational woes — threaten forecast production jumps.
Cochilco expects output in Chile, which mines roughly a third of the world’s copper, will rise to 5.754 million tons in 2014 from an estimated at 5.433 million tons last year,
which was an 3.2 percent increase from the year before.
“This is fairly positive news because international estimates said Chile couldn’t reach predicted output and Chile’s production rose 3.2 percent,” Mining Minister Hernan de Solminihac said.

Cochilco had estimated 2012 copper output at 5.45 million tons in November, and de Solminihac had said in April that production would reach a whopping 5.7 million tons. Many analysts at the time had called his forecast too ambitious.
If Chile meets its production forecast, the higher copper supply could “slightly weigh on prices,” said George Gero, precious metals strategist at RBC Capital Markets Global
Futures.
The Andean country will attract $ 100 billion in mining investment in the next 10 to 12 years, a slightly longer time frame than previously forecast, as regulatory uncertainty and energy woes loom as key risks, the Sonami mining association said earlier this month.
Industry experts say Chile is failing to take a firm hand in regulating its mining and energy industries, leaving billions of dollars worth of projects exposed to the risk of lawsuits by local communities.
The forecast for climbing output from Chile comes as some global miners are scaling back investment plans as operating costs soar and the world’s economic outlook remains volatile.
But many miners in the Andean country have major plans to revamp aging mines.
World No. 1 copper miner Codelco has an ambitious investment plan worth roughly $ 27 billion to maintain and ultimately lift production at its copper mines to more than 2 million tons.
In addition, BHP Billiton and Rio Tinto have approved plans for a $ 4.5 billion expansion of Escondida, already the world’s biggest copper mine.
The world’s third-biggest copper mine, Collahuasi, hopes to have a good year and turn the corner to produce more than it did in 2012, its CEO told Reuters recently.
Anglo American’s major growth project, Los Bronces, helped increase the company’s copper production in 2012, a relative bright spot for the global miner.
Cochilco sees copper prices averaging $ 3.57 per pound this year, unchanged from its previous estimate, before dropping to around $ 3.32 per pound in 2014.
Globally, it sees copper output growing 3.3 percent this year, outpacing demand growth, which is seen up 1.5 percent. It expects a 56,000 ton copper surplus in the market in 2013.

What's happening around Saudi Arabia

Arab News Editor in Chief Mohammed Fahad Al-Harthi hosted a banquet for editors in chief of local print and online publications, Shoura Council members, representative of the Ministry of Culture and Information, prominent writers and columnists in Je...
JEDDAH: Health workers from Riyadh’s National Guard hospital would not be allowed to perform Haj this year, or work at the holy sites, the Ministry of Health has announced.Hail Al-Abdali, head of the ministry’s infection control unit, was reportedly...
JEDDAH: The Minister of Municipal and Rural Affairs Abdul Lateef Al-Asheikh has introduced new legislative amendments to allow voters to produce a range of identity documents so that they can register for the upcoming elections.Al-Asheikh amended Art...
RIYADH: Construction on the multibillion-riyal Riyadh Metro is well under way with several giant drilling machines working overtime to ensure that underground tunnels for the project are completed on schedule.The Arriyadh Development Authority (ADA)...
JEDDAH: Officials from the Saudi Ministry of Haj have been holding meetings with their counterparts from Arab and South Asian nations in preparation for this year’s pilgrimage.Abdulrahman bin Ali Al-Nafei, assistant deputy minister of Haj and in char...
RIYADH: Four polling stations in Tabuk have stopped registering voters for the Dec. 12 municipal elections in the region.Ibrahim bin Ahmed Al-Ghabban, undersecretary at the Tabuk municipality and member of the local committee for the election of a mu...
JEDDAH: Many prospective candidates running for seats on the country’s municipal councils have been using Twitter to boost their election campaigns.Many have been using religious expressions in their messages, such as “In the name of God,” and “If He...
DAMMAM: There has been a flurry of activity on the Kingdom’s highways as service companies race to meet the Jan. 19 deadline for the revamp of dilapidated gas stations.The Ministry of Municipal and Rural Affairs has previously handed out rehabilitati...
RIYADH: Saudi Arabia and Germany have signed an agreement on mutual protection of classified information to provide a legal framework for enhanced cooperation in the defense sector. The pact was signed by Mohammed bin Abdullah Al-Aish, assistant mini...
JEDDAH: While Saudi Arabia has now arrested the main suspect in the 1996 bombing of the Alkhobar Towers residence at an American military base in the country, the hunt continues for three others, according to reports in the local media on Thursday.Ah...
AL-AHSA: Located in the western part of Al-Qara Mountain is a workshop for the pottery industry, molding clay in plastic forms that are given permanency by the use of intense heat. This art form became one of the major attractions in Al-Ahsa Archaeol...
RIYADH: A newborn baby boy, who appeared to be just hours old, was found lying in the grass, covered with a blanket, in an abandoned field in Jazan on Tuesday morning.According to local residents, a family passing by heard the baby crying and rushed...
TAIF: Several schools in Taif have recorded a lack of schoolbooks for primary and intermediate classes for the first time in 15 years, a local publication reported.This has resulted in many boys and girls not turning up for classes. A source said tha...
RIYADH: Justice Minister Walid Al-Samaani said that directives from Custodian of the Two Holy Mosques King Salman to protect the rights of citizens and public properties are being strictly implemented.“All legal measures are being taken to hold accou...
RIYADH: Najran region has retained its veritable unique cultural heritage and attractions, which include old mud buildings constructed some 300 years ago.While the laid-back ambience in many areas is gone due to modern life brought about by contempor...

Stay Connected

Facebook