Copper prices increased 10.0% over 4Q16. The World Bank, by way of Rutger Bloemenkamp, believes supplies are going to grow over the next 24 months. And while there also is the potential that wage negotiations for copper miners and workers in Chile could result in a reduction in production, an increase of 10-15% is predicted short-term. Reuters reports copper likely will trade around $3 over the next few years. At the time of this writing, copper trades at $2.60 +/-.
Copper’s 2017 price surge came to a halt in March. Comex’s high point came on the first trading day when copper sold for $2.73 a pound, then fell to a low of $2.57 before leveling off in the $2.60s the rest of the month. Comex copper reached a yearly high of $2.78 a pound on February 13, rising more than 25% over the previous six months. Analysts attribute the slowdown to a sudden surge of supply into LME warehouses and China’s announcement of a lower economic growth target for 2017.
Look for copper to rise in the coming months due to a host of supply disruptions, says Goldman Sachs. The investment banking firm predicts LME copper will surge to around $6,200 a ton over the next three months, up from $5,860 on March 31, although some other analysts see it heading even higher this year. Longer-term, copper’s prospects look bullish thanks to forecasted global production deficits, which totaled 50,000 tons in 2016, according to the International Copper Study Group.
The biggest of those aforementioned supply disruptions concerns is Freeport-McMoRan’s dispute with the Indonesian government over control of the Grasberg operation, the second-largest copper mine in the world. Indonesia imposed new rules on miners aimed at gaining more revenue from their operations, which Freeport-McMoRan claims violates an operating agreement dating back to 1991. The company is threatening to take Indonesia to arbitration to resolve the dispute, although in the meantime it has scaled back operations.