SANTIAGO, Apr 17, 2012 (Dow Jones ) -- The deficit in the global market for refined copper is expected to dry up by 2015, heralding the arrival of years of excess supply, the copper group manager for commodities research service CRU said on Tuesday.
Vanessa Davidson said demand for refined copper is set to outpace supply in 2012 and 2013, but the startup of mine projects should push the market into a "heavy oversupply" beginning in 2016.
"There is a wave of new projects" which should more than fill the supply gap, Davidson said at the CESCO week copper industry conference here. Davidson said CRU projects the supply surplus to last through 2022.
That should cap prices for the metal, Davidson said. She said prices were likely to hold around $7,500 a metric ton in 2016, and could fall as the supply surplus develops in the following years. Benchmark copper prices on the London Metal Exchange hit a record above $10,000 a metric ton last year.
Copper miners have reaped the rewards of historically high prices in recent years, as strong growth in consumption in China and other emerging markets outstripped the ability of mines to expand production. Those healthy margins "are expected to be squeezed," Davidson said, the result of higher mining costs and the eventual oversupply.
Copper is widely used in wiring, plumbing, general manufacturing and consumer electronics.