By Manuel Farias
SANTIAGO, Nov 24 (Reuters) – Global copper prices will average about $1.60 a lb in 2009, less than half the levels for most of this year and well below record highs in July of over $4.00 a lb, Chile’s state copper commission said on Monday.
Cochilco, considered one of the world’s top authorities on the copper market, said prices would stay low for the next year at least as they are pummeled by a global financial crisis that is nipping at the heels of China, which consumes 25 percent of the world’s copper.
Cochilco said copper prices would come in between $3.15 and $3.20 per lb this year, cutting an earlier forecast of $3.70.
The 2009 estimate compared with earlier forecasts for prices near $3.40 per lb.
The sudden downshift in prices comes as world inventories jump, and the supply/demand equation shifts into a surplus of about 459,000 tonnes next year, compared to earlier deficits.
Cochilco said global copper supply in 2008 would be about 18.130 million tonnes, up 1.7 percent from the year-ago period. That compares to demand of about 18.2 million tonnes.
For 2009, supply is seen growing 6.6 percent as 1.2 million tonnes of new output comes on line from Australia, Zambia, Chile, Democratic Republic of Congo and Indonesia. In the same period demand is seen growing only 3.4 percent.
“In 2009, a clear surplus is expected due to the deteriorating (global) economy and lower-than-expected demand for copper,” Cochilco said in its report.
The commission also cut its copper output forecasts for Chile, the world’s largest copper producer. It said output would come in at 5.57 million tonnes in 2009, less than a forecast in October for output of 5.8 million tonnes.
For 2008, the commission said Chile’s copper output would be 5.36 million tonnes, below a previous forecast for 5.45 million tonnes. (Reporting by Manuel Farias; additional reporting by Pav Jordan; editing by Jim Marshall)
© Thomson Reuters 2008 All rights reserved