Chile's copper industry think tank CESCO sees copper prices staying high over the coming years, holding levels above $3 per lb in 2007 and 2008, Executive Director Juan Carlos Guajardo told Reuters on Tuesday. Driven by Chinese demand and a strong global economy, Guajardo said prices could fall off in 2009 but would still be robust as far out as 2012.
"At current inventory levels, which are super low, if supply does not grow substantively over demand, I see no possibility of a strong market correction," said Guajardo, formerly director of research at Chile's government copper commission Cochilco.
Chile is the world's largest copper producer. The Center for Copper and Mining Studies CESCO is a non-profit corporation and think tank that links much of the world's copper industry leaders in its network.
"The 'stronger for longer' scenario has been confirmed for CESCO," Guajardo said, with low inventories persisting for longer than expected because projects are not coming on line on schedule and with global growth stronger than some had predicted.
Copper for May delivery was down slightly at $3.54/lb on Tuesday, but it has rebounded more than a dollar per lb since February, confounding many who thought the red metal was on the decline following a years-long up-cycle.
The recent rise occurred as China, the world's most voracious consumer of the red metal, replenished inventories and as investment funds jumped back into the market.
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