Reuters cited Mr Thomas Keller CEO of Codelco as saying that company expects the global copper market to swing into a slight surplus in 2013 after several years of deficit but the small excess will have little impact on prices.
Uncertainty over the strength of an economic rebound in China which accounts for 40% of refined copper demand has led analysts to predict the copper market will see a 22,500 tonne surplus next year against a deficit of 162,000 tonnes this year.
Mr Keller said that "It looks like there will be a slight surplus next year but the predicted amount is a small number which could change easily. Even if the forecast surplus was proved right it won't have much impact on copper prices. The current spot and forward prices are reflecting the reality for prices now and next year."
Benchmark 3 month copper prices on the London Metal Exchange were quoted at around USD 7,930 per tonne up around 10% from a year low of USD 7,219.50 in June. Prices are up about 4% on the year and are expected to average USD 8,267.30 in 2013.
Mr Keller said that "Copper prices will be affected by a lot of volatility because of macroeconomic issues worldwide. The volatility will not be affected so much by the industry specific reasons but more related to the economic conditions.”
Therefore, although we remain positive in terms of outlook for the industry next year and we have found encouragement in China, we are still mindful that there are issues on the macro front that will affect prices.
China currently accounts for roughly 40% of Codelco's production and Keller said that the company might increase shipments to Asia and the United States next year on better demand.
Mr Keller said that China will remain as the driving force for the copper market in the near future. Emerging economies should also experience developments as we have witnessed in China, such as India, Brazil and Indonesia.
China could stage a tepid economic rebound in the fourth quarter on higher public infrastructure spending and after seven consecutive quarters of cool down, but growth will remain lethargic through 2013.
