2015 May Set Copper Scene for Years Ahead

John Robertson

PortfolioDirect

The International Copper Study Group estimate of copper usage in the first quarter of 2015 is 2.8% lower than its estimate of usage in the corresponding period of 2014. With refined production having risen by 4.7%, the market balance is tilting toward lower prices. Current usage rates could have a dramatic impact on prices for several years. Three percentage points in market size is equivalent to slightly more than 50% of estimated refined inventories at the end of 2014. If sustained for a year, the difference between the first quarter growth rate and 3% average growth is equivalent to 100% of end-2014 inventories. If consumption does not grow in 2015, inventories could remain above current levels for the next five years (with plausible assumptions about output growth) even if consumption grows at an above average rate subsequently. The corollary is also true. Anything better than average growth in 2015 would set the scene for historically strong market conditions. But that possibility is receding.


2 topics

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.