Light on the Horizon for Copper


“The recession in the world's highly industrialized nations is expected to erode copper demand but. . . long-term copper price story remains upbeat.”

Copper prices should remain depressed "over at least the next year,” according to BMO Capital Markets’ Bart Melek. "The BMO thesis that the fundamental commodities story is bullish remains intact,” he added, “With the developing world set to keep copper demand growing and a recovery in the western world, we expect copper consumption in 2010 through 2013 to return to the approximately 3% annual growth level of recent years and to trend slightly higher thereafter."

BMO projects that copper prices will average US$1.50/lb in the next three months, $1.85/lb for 2009 and $2.50/lb in 2010. "The metal looks likely to revisit recent annual highs near US$3.00/lb starting in 2011 before settling closer to US$2.20/lb long term,” Melek said, “which we estimate is the price needed to balance supply with demand,"

Global infrastructure programs now proposed in the U.S., China and other nations will be "a positive for copper consumption." Melek forecasts "A modest recovery is expected to start after the worst of the economic downturn is over. . .likely in the latter part of 2009."

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