Reuters reported that while copper miners may indeed cut output in 2016, any cuts likely won’t be enough to balance out weak prospects for Chinese demand growth.
That’s bad news for miners — at the moment, Thomson Reuters GFMS believes that currently about 50 percent of mines are losing money on a total cost basis.
The news outlet states:
CRU expects copper prices to average around $4,600 a tonne this year.
“We do anticipate additional cutbacks of another 185,000 tonnes this year … It’s a significant number that will help to balance the market, but a lot of loss-making mine capacity remains in operation.”
Any cuts will go some way towards offsetting new capacity of almost 1 million tonnes from mine projects expected to start up in the next year or so.
But they are unlikely to be large enough to balance the copper market, which according to a Reuters survey is expected to show a surplus this year of 150,000 tonnes.
The forecast for the average copper price this year at $4,858 a tonne is the lowest since the average of $3,600 in 2005 when the commodities super-cycle was starting, fuelled by China’s industrialisation and urbanisation.
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