According to Morgan Stanley, this year will likely see copper prices go up by around 7.6 percent, riding on increased demand from China, the U.S., and Europe. An ongoing shortage in copper supplies promises to exacerbate the situation.
According to the company's analyses, copper prices should go up to $8,554 per ton this year. Last year, prices were around $7,952 per ton. Prices will likely decrease somewhat in 2014 and continue to decline after that.
“China’s industrial production cycle turned up in the fourth quarter of 2012, with infrastructure-related demand and non-ferrous metal output contributing strongly to increased output and higher orders,” the analysts said. “We believe this improved position will strengthen further in 2013, particularly as widespread industry destocking of finished products appears to be ending.”
China’s year-on-year copper demand is expected to be around 8.4 percent, up from 6.7 percent in 2012. Through 2014, demand should go up another 5 percent.
As for the U.S., increased domestic automobile production and construction sector activity will be key to pushing up demand for copper.
This is the fourth straight year of a copper supply deficit, and worldwide demand is expected to be greater than available supplies by roughly 17,000 tons. At least that’s less than last year’s 45,000 ton deficit.
Last Tuesday, copper for 3-month delivery dropped to $8,103 per ton (down 0.4 percent) on the London Metal Exchange.