Copper Market Outlook - Third Quarter 2009
RBC Capital Markets

Demand
Global economic leading indicators have begun to improve, pointing to a rebound in activity over the next 6 to 12 months.  However, global copper demand remains weak.  China has been the main driver of global copper demand growth over the past five years and remains a key to the outlook.  In the near term, Chinese government restocking has supported demand, leading to higher domestic prices and increased imports.  RBC forecast a decline in global consumption of 4.1% in 2009, followed by a rebound of 11.1% in 2010, 5.7% in 2011, 3.9% in 2012 and 4.0% in 2013.

In 2008, global annual demand for copper was approximately 18 million tonnes.  Demand is expected to rise to over 22 million tonnes by 2013.

Supply
RBC analysis suggests that in 2009, capacity utilization rates could fall to levels not seen since the early 1980s. Operating rates have fallen due to a shortage of feed, including scrap; collapsing demand; and a grossly oversupplied sulphuric acid market.  RBC expect the decline in utilization rates in 2009 to give way to a recovery beginning in 2010.  However, they do not expect refinery capacity to return to full effective utilization rates due to a shortage of concentrate.  RBC forecast a decline in global refined copper production of 1.8%, followed by growth of 6.5% in 2010, 5.2% in 2011, 5.9% in 2012 and 1.9% in 2013.