a ‘no-forecast’ price forecast: forward prices versus actuals the charts compare lme 15-month...
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A ‘no-forecast’ price forecast: forward prices versus actuals
1000
1200
1400
1600
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2400
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2800
3000
2002 2003 2004 2005 2006 2007 2008
End October
$/t
on
ne
15 month forward price
Cash price 15 months later
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2000
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4000
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6000
7000
8000
2002 2003 2004 2005 2006 2007 2008
End October
$/to
nn
e
15 month forward price
Cash price 15 months later
0
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2000
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4000
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6000
2002 2003 2004 2005 2006 2007 2008
End October
$/to
nn
e
15 month forward price
Cash price 15 months later
The charts compare LME 15-month prices at end-October with cash prices15 months later
ALUMINIUM COPPER
ZINC
Analysts’ forecasts of metal prices
Forecasts by analysts published in the LME Ringsider in October for future years
ALUMINIUM COPPER
LEAD ZINC
0
500
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3500
4000
2004 2005 2006 2007 2008 2009 2010
US
$/t
on
ne
Oct 05
Oct 06
Oct 09
Oct 08
Oct 07
0
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7000
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9000
10000
2004 2005 2006 2007 2008 2009 2010
US
$/t
on
ne
Oct 05
Oct 06
Oct 09
Oct 08
Oct 07 B
Oct 07 A
0
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3000
2004 2005 2006 2007 2008 2009 2010
US
$/t
on
ne
Oct 05
Oct 06
Oct 09
Oct 08
Oct 07
0
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3500
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4500
2004 2005 2006 2007 2008 2009 2010
US
$/t
on
ne
Oct 05
Oct 06
Oct 09
Oct 08
Oct 07
Projecting historic trends - one
0
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300
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
Year
US
Cen
ts/l
b i
n r
eal
term
s
Projecting historic trends – one !
0
50
100
150
200
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300
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
Year
US
Cen
ts/l
b i
n r
eal
term
s
Projecting historic trends - two
0
50
100
150
200
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350
400
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37
Year
US
Cen
ts/l
b i
n r
eal
term
s
Projecting historic trends – two !
0
50
100
150
200
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300
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400
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37
Year
US
Cen
ts/l
b i
n r
eal
term
s
Copper prices in real terms1900-2009
0
50
100
150
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450
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
US
cen
ts/l
b i
n r
eal
2009
ter
ms
US producer
LME
There are probable world mine reserves of more than 100 Mt of copper, or enough for 80 years at the 1933 rate of consumption. All present knowledge indicates that in spite of the most extensive improvements in technology which can be expected, the second half of this reserve will cost a good deal more to extract than the first half. If consumption should expand at a rate approaching that of 1830 to 1930, there promises to be an acute shortage within a generation. (Skelton, 1934)
‘Ultimately recoverable’ reserves of copper 1930-2010
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
Cumulative output from 1726 Remaining reserves
Forecasts of copper’s intensity of use
90
91
92
93
94
95
96
97
98
99
Chase Brook Hunt Actual Chase Brook Hunt Actual
Ind
ex
nu
mb
ers
19
80
= 1
00
1985 1990United States
75
80
85
90
95
100
105
Chase Brook Hunt Actual Chase Brook Hunt Actual
Ind
ex
nu
mb
ers
19
80
= 1
00
1985 1990Japan
Sources: Chase Econometrics’ World Copper Outlook, March 1984. Brook Hunt evidence to the US International Trade Commission, May 1984. WBMS and IMF for actuals.
Refined zinc usage: a 1982 forecast
0
1000
2000
3000
4000
5000
6000
7000
8000
1980 2000 forecast 2000 actual
'00
0 t
on
ne
s
Western Europe(+0.6%)
Rest of World(-0.03%)
Sources: ILZSG, SRI Metallic Minerals Programme 1982
Refined zinc usage: details
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
1980 2000 forecast 2000 actual
'00
0 t
on
ne
s
Eastern Countries(+31.2%)
Other countries(-17.2%)
Latin America(+62.2%)
Japan(+32.7%)
North America(-14.9%)
Western Europe(+0.6%)
Sources: ILZSG, SRI Metallic Minerals Programme 1982
Copper usage, production & capacity
10000
11000
12000
13000
14000
15000
16000
17000
18000
19000
20000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
'000
to
nn
es c
op
per
Mine production
Refined copper usage
Mine capacity
Primary copper usage
Source: ICSG press releases, July 2008 & June 2009
Copper mine %utilisation: 1973-2007
70
75
80
85
90
95
1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006
% m
ine
uti
lisat
ion
Western world. Sources: RTZ Mine Information System, IWCC, ICSG, WBMS.
Output of Escondida & Grasberg: 1989 to 2007
0
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2000
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3000
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
'000
to
nn
es c
on
tain
ed c
op
per
Output
Capacity
Source: IWCC Survey of Copper Capacity, March 2008
Output of mines producing both copper and molybdenum
90
100
110
120
130
140
150
160
170
180
190
200
210
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Ind
ex
nu
mb
ers
19
96
=1
00
Copper
Molybdenum
Ore
Source: Raw Materials Database, Raw Materials Group, Sweden