Lead and tin are expected to be the best performing metals in the coming year, with sentiment towards previous favourite copper falling dramatically in the annual Macquarie survey of sentiment among delegates at the London Metals Exchange (LME) Base Metals Week conference.
Delegates at the London conference, the metals world’s main annual event, knocked copper off its perch as the market favourite for the first time since 2008. Last year 55% of delegates said copper would be the best performing metal but this year it fell to 17%.
Copper’s price has been sliding, down 12% this year, as demand from China, the world’s number one consumer, fell while world supply has been growing. Supply from new and expanded mining operations is expected to grow by an average of 4% a year from 2013 to 2018, with a 5% rise this year and 6% growth next year, putting further pressure on prices.
Copper has been said to be the only metal whose price shows a premium over production costs, which could change quickly if growing supply hits prices.
There has been a period of steady supply growth in the past 18 months or so, according to earlier research published by Macquarie Research. One million tonnes of new supply are expected to come on stream soon from two new mines alone, the Mina Ministro Hales in Chile and the Rio Tinto’s Oyu Tolgoi mine in Mongolia.
On Friday, 11 October, Japan’s JX Nippon Mining & Metals Corp announced that operations will start at its Caserones copper mine in Chile in January 2014. Initial investment in the mine has been raised from $3Bn to $4.2Bn, it was announced, with 150,000 tonnes of copper to be produced annually.
Delegates at LME Week were however relatively upbeat about the prospects for markets generally, despite supply pressures, and thought continuing recovery in developed markets allied to stronger growth in China will offer some upside to metals prices.
Over a third of delegates expected global growth to continue over the next year and over half thought demand for metals would grow. Almost half expected Chinese growth of around 7% to 8%. Capital expenditure cuts by mining companies were expected to dominate industry attention by mid 2014.
Photo: Marshman @ English Language Wikipedia