NEW YORK Aurubis AG expects this years copper surplus to be smaller than it initially forecast due to both planned and unplanned outages at a number of mines.
An April 10 wall slide at Rio Tinto Plcs Bingham Canyon Mine will remove some 100,000 tonnes of refined copper from the market this year (amm.com, April 11), while the March shutdown of Vedanta Resources Plcs Tuticorin smelter in India has taken out around 300,000 tonnes of copper smelter production (amm.com, April 4), Aurubis said in an April 23 letter.
These outages, coupled with planned maintenance shutdowns, indicate that "the market surplus of refined copper anticipated worldwide in 2013 will be much lower than expected" and will eventually put a floor under copper prices, which have dropped nearly 6 percent in one week, the Hamburg, Germany-based company said.
A number of forecasts indicate copper supply will exceed demand by 341,000 tonnes in 2013. The outlook encouraged New York-based Goldman Sachs Inc. to lower its 12-month copper price forecast to $7,000 per tonne ($3.175 per pound) from $8,000 per tonne ($3.629 per pound) previously and led New York-based Citigroup Inc.s research group to lower its 2013 average price to $3.41 per pound from $3.61 (amm.com, April 22).
However, Aurubis maintains that "continued low copper prices are unlikely" due to the Bingham Canyon and Tuticorin outages.
The London Metal Exchange three-month copper contract ended the April 23 official session at $6,842 per tonne ($3.104 per pound), down 5.6 percent from $7,250.50 per tonne ($3.289 per pound) a week earlier and down 17.4 percent from this years high of $8,286 per tonne ($3.76 per pound) on Feb. 5.
Plunging copper prices are directly linked to weaker-than-expected growth in China and ongoing issues in Europe. Chinas refined copper imports fell 36.7 percent in March compared with a year earlier (amm.com, April 22).