Copper: what to look for in 2016 Report

Insight 13 January 2016

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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below

Report summary

During 2016 we are expecting a slight improvement in demand growth for refined copper from the disappointing performance seen in 2015. However, production from new mine projects and expansions will drive continued increases in supply, resulting in a modest copper metal market surplus. As a consequence, stocks of refined metal are forecast to rise during 2016 and the annual average copper price is forecast to be at a lower level than last year. This insight discusses the main risks to this forecast. Points that will be of particular interest as the year proceeds will be the outlook for copper demand in China and other emerging markets, the likelihood of further curtailments to mine supply due to disruptions and cost related closures and how deflation in the cost structure of the industry will affect the fundamental support level for the copper price.

Executive summary
How will emerging market demand fare in 2016?
- China infrastructure seen supporting consumption, but substantial downside risks remain
- What is the outlook for other sectors in China?
- Divergent performance likely amongst other emerging markets
Risks to 2016 supply forecast
- Disruptions to mine supply
- Cost related mine closures
- Smelter outlook
Does cost deflation represent a downside risk to our price forecast?

Tables and charts

This report includes the following images and tables:

Annual average copper price v marginal cost of production
C1 direct cash cost 2015 v 2016
China GDP growth versus power grid investment and infrastructure fixed asset investment (FAI)
Refined consumption growth in selected emerging markets, 2015 and 2016 (kt)