copper market is expected to remain in balance next year, while
alumina, which has been in structural overcapacity since 2007,
is forecast to remain that way for the foreseeable future,
according to Simon Collins, head of nonferrous and bulk
commodities at Trafigura Beheer BV.
"New production (of
copper) is coming on-stream and supply will increase in
2014-15, but low inventories and (gross domestic product)
growth should support prices," Collins said in Amsterdam-based
Trafiguras annual report Dec. 16.
Collins does not
expect copper prices to rise markedly, but said a price
collapse also is unlikely since concentrates are trading at
close to cost levels for some producing areas.
The market for copper
has been tight in recent years, with concentrate producers
struggling to meet production targets, he said. "Globally,
copper inventories are low, with most stock held in China. But
new mines are now being developed, and the markets for copper
and its concentrate may be on the verge of a sea change.
"At the end of the
financial year, maintenance shutdowns by smelters in the
Western World, comfortable concentrate stock levels at Chinese
smelters and a weak Chinese sulfuric acid market reduced demand
for concentrates and pushed treatment and refining charges up
to three-digit levels," he said.
Meanwhile, a general
lack of volatility restricted alumina trading opportunities
this year, and the overcapacity will continue to keep the
market challenging for some time, Collins said. "Oversupply
drove down domestic prices in China and alumina imports fell by
more than a third."
China accounts for 50
percent of global alumina production, but remains a net
importer due to the countrys expansion in smelting
The alumina market has
undergone structural changes in the past three years and
"producers now price longer-term contracts off an agreed index
based on the spot market at the time of delivery rather than as
a percentage of the aluminum price," Collins said. This change
has shifted price risk exposure from alumina producers to
smelters, he added.
A version of this article was first published by AMM sister
publication Metal Bulletin.