The Chilean Copper Commission has maintained its price forecast for 2016 at $2.15/lb despite expectations of slower demand growth in many markets, including China, the world's largest consumer of the metal, on expectations that scrap supplies will dry up.
Presenting the government body's latest quarterly report, Mines Minister Aurora Williams said global copper demand will grow by 1.8% this year to 23.151 million mt, compared with global growth of 2.3% forecast three months ago.
Weaker Chinese demand explains much of the drop.
"Chinese copper demand growth for 2016 and 2017 has been cut from 3% to 2.5% to reflect almost flat manufacturing output and falling GDP growth," the minister said.
Global demand next year is expected to rise 2.1% to 23.645 million mt, against 2.6% forecast in January.
Meanwhile, global mine production is expected to rise 5.1% this year to 20.25 million mt, faster than expected at the start of the year, and will grow by another 2.9% next year.
However, rising mine output, particularly in Peru, Mexico and Indonesia, will be offset by a 4% drop in secondary copper production from scrap to around 3.6 million mt.
As a result, Cochilco reduced its global refined copper surplus for 2016 to 140,000 mt, from 198,000 mt forecast in January, and to 92,000 mt for 2017, from 168,000 mt previously.
The forecasts do not assume further production cuts by miners, Cochilco head Sergio Hernandez said.
