LONDON, Aug 23, 2011 (Dow Jones) -- Chilean copper producer Antofagasta PLC (ANTO.LN) said Tuesday that consensus estimates forecast a copper deficit of about 500,000 metric tons in 2011 and an average copper price of more than $4.20 a pound during the second half of the year.
But it warned that "prices are likely to remain subject to volatility with down-side risks, given continuing concerns over the macro-economic environment and the increased role of financial investment in commodity markets in recent years."
Copper prices on the London Metal Exchange reached a record average for a calendar half year of $4.26 a pound in the first half of 2011, Antofagasta said. But prices have fallen to about $4.00 a pound by mid-August due to weaker macro-economic conditions.
The FTSE-100 miner also said that the copper concentrate supply and demand remains well balanced due to a low smelter utilization rate, ample scrap supply and a drop in inventories, albeit within the context of an industry where available smelting capacity continues to exceed mine supply.
It expects that the concentrate market could soon enter into deficit and remain tight for the coming years, due to further smelter capacity expansion, particularly in China.
Antofagasta said mid-year concentrate contracts are reported to have been settled at $85 a dry metric ton for smelting and $0.085 cents a pound of copper for refining.
"The spot market has been improving in favor of miners due to the restart of the Onahama smelter in Japan which had been closed following the earthquake, a tighter scrap market and mine production disruptions," it said.