Concentrate Shortages and Strong Demand to Boost Copper Prices - BOA

SHANGHAI, Mar. 31 (SMM) -- Copper concentrate supply shortages, strong demand, as well as restocking by consumers will help boost copper prices in 2010, said Bank of America (BOA) on Tuesday.

BOA expects copper prices to average at USD 7,275/mt in 2010, higher than the estimation at USD 7,125/mt made in January. The bank estimates copper prices to average at USD 8,000/mt in 2011, unchanged from January.

The bank said the reduction of stock building will moderate in the whole manufacturing industry chain, and supply of copper concentrate will remain tight. Supply tightness of copper concentrate will restrain refined copper output in the coming several years. 

"Improvement of downstream demand and large-scale stocks rebuilding will become more evident this year."

The bank expects copper market will see supply and demand balance in 2010, compared with the previous estimation of supply shortages of 23,000 mt.

BOA said most base metals markets had reported supply shortages during the initial phase of economic recession. As demand is now accelerating, the bank expects supply shortfalls to reassert themselves. 

Platinum output in South Africa will remain well below the previous high level, and this will further intensify supply shortages in 2010 and 2011.

The below chart shows BOA's price estimation for base and precious metals in 2010 and 2011. Unit for base metals is USD per ton, and unit for precious metals is US cents per ounce. 

(Edited by SMM)