EXECUTIVE SUMMARY

this month ’ s series :

Funds
Investment funds today are holding
more refined copper tonnage than
ever. When they foresee a rise in
prices and start buying up stocks,
they help make that vision reality
by increasing physical demand. The
opposite is true on the downside.
End user demand
China’s huge purchases of physical
copper “saved 2009.” The Asian
giant’s demand growth is expected
fall in 2010 compared to last year,
but perhaps this would leave it at
more sustainable level.
Market balance
Analyst opinions on the global
copper market balance in the coming
years vary greatly depending on who
you ask. Even when they agree, for
example, that supply will rise slightly
in 2010, market balance forecasts
range from a deficit of 87,000t to a
surplus of 578,000t.
Copper: Market outlook and the
role of Latin America
Expert opinion on where the copper price is
going in the coming years is not easy to pin
down. Different analysts see things quite
differently, at least in terms of the refined
copper market balance, but certain market
indicators seem to be telling us that the
good times are far from over.
Looking at what investment funds are
doing today, for example, it is apparent
that a majority believes prices will rise
in the short to medium term. Some
people think China, and in particular
its housing market, could be a bubble
soon to burst, while others find the idea
unlikely. And though fears do exist that a
May 2010
looming euro zone debt crisis could slash
demand, analysts seem to agree that the
overriding macroeconomic conditions
in the OECD as a whole are pointing to
steady growth.
Latin America, of course, is in a prime
position to benefit from any rise in red
metal demand or prices. The region leads all
the forecasts for mine production growth,
holds the biggest known reserves and has
consistently been the site of the most
exploration activity for years. As such,
in terms of providing supply for a copper-
hungry world in the next few years, all eyes
are on Latin America.

Cost advantage
Apart from being the undisputed leader
in production figures, South America
also boasts the lowest average copper Copper mine production by region, 2009-15
cash costs in the world.

2009 Production Total change % Change Total change % Change 2015 production
base 2009-12 2009-12 2013-15 2013-15
Africa 1201 761 30% 109 4% 2071
Asia 3300 -12 0% 811 31% 4099
Latin America 7196 1276 50% 1867 71% 10339
North America 1741 333 13% -53 -2% 2021
Oceania 1136 -34 -1% -223 -8% 879
Europe 1496 231 9% 123 5% 1850
Total world 16069 2555 100% 2634 100% 21259

In thousands of metric tonnes

Source: Wood Mackenzie, Macquarie Research, April 2010

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 Written and researched by
Laura Superneau

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