Copper Best Among Base Metals In 2010 - BarCap

LONGDON, Oct. 13 -- A strong recovery in the Western world's copper demand next year and continued supply constraints should make copper one of the best metal plays in 2010, Barclays Capital analyst Gayle Berry said Monday.

    Berry predicted LME cash copper would average $6,563 a metric ton next year, 30% above this year's forecasted average of $5,050/ton and 5% above current prices.

    "A big improvement in global consumption growth is imminent," Berry said in a presentation at the industry's annual LME Week jamboree in London.

    Widespread inventory drawdowns in OECD countries this year could force consumers to restock on a scale not seen since the mid-1970s, offsetting slowing Chinese demand, Berry said.

    Should that occur, buyers will find the market relatively tight, she said. "Copper is tighter than almost any other base metal, and is the most vulnerable to supply disruptions."

    About 23% of world mine capacity is at risk of shutdowns during upcoming labor negotiations in 2009, and 3% in 2010.

    While mined copper production has been increasing, the copper concentrate market remains very tight and there are few signs refined production will improve, Berry said.

    Spending by miners, which fell more than 20% this year as producers cut costs to counter plummeting demand, will likely drop another 5% in 2010, constraining future supply growth.

    Berry forecasted refined copper supply rising 1.9% in 2010 to 18.359 million tons and demand growing 2.4% to 18.202 million tons, leaving a surplus of 156,000 tons.

    (Source: Dow Jones)