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The Global Copper Industry: 2004 Review and Forecast

Posted on: Thursday, 20 October 2005, 06:00 CDT

By Anonymous

Items of Note from the Field, Profession, and Society

Increases in copper prices and sharp growth in demand made 2004 a busy and profitable year for the copper industry. Curtailed production was brought back on stream to meet the increasing metal needs of China and improving economies elsewhere, but growth in demand outstripped increases in production, leading to depletion of the world's stockpiled copper reserves.

Worldwide demand for copper reached 16,600 kt in 2004, up 6.8% from the previous year, according to copper producer Norddeutsche Affinerie AG (NA Group). Industrial growth in China-particularly in the copper-intensive transport and infrastructure sectors-accounted for much of the global growth in consumption. Chinese demand increased 13.5% in 2004. The country's annual copper demand of 3,500 kt accounts for roughly 21% of global demand. Copper consumption also grew in North America in 2004, rising 7% to 3,010 kt, while European demand increased 1.6% to 4,100 kt.

In response to increasing demand, world mine production of copper rose by about 900 kt (6.6%) to 14,500 kt, according to estimates by the U.S. Geological Survey. Chile led the world in mine production with 5,380 kt of copper, followed by the United States at 1,160 kt and Peru at 1,000 kt. Increased capacities and restoration of curtailed production in Chile and Peru accounted for approximately two-thirds of the increased output in 2004.

Global production of refined copper, however, grew by only 560 kt (3.7%) in 2004, while consumption grew by almost 900 kt (5.7%), according to the International Copper Study Group. This led to a production deficit of an estimated 700 kt in 2004. Stock volumes at the London Metal Exchange, the New York Commodity Exchange, and the Shanghai Futures Exchange decreased 84% over the course of the fiscal year, dropping from 936 kt to 151 kt of cathodes, according to the NA Group.

Copper prices reached an annual average of $1.30 per pound on the London Metal Exchange in 2004, up almost 50 cents over the previous year. This was the highest annual average since 1995, according to Xstrata. Copper prices began the year at $1.06 per pound and moved significantly higher for most of the year, reaching a 16-year high of $1.49 per pound in October, before closing the year at $ 1.48, according to Freeport McMoRan Copper & Gold. Copper prices remained strong in early 2005, and low inventory levels, expectations of continued strong demand, and limited supplies mean a positive outlook for copper markets.

What follows is a look at the 2004 operations of selected copper production companies, based on information published in those companies' annual reports.

Copyright Minerals, Metals & Materials Society Oct 2005

Source: JOM

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