By Steve Fiscor, Editor-in-Chief
While gold and silver cooled their heels, dropping 7.6% and 11.2% respectively after record price runs at the end of 2010, iron ore and copper surged to record levels. At the end of January, copper was trading at $187 per dry metric ton (mt) and copper was selling for $4.31/lb, a price increase of 11.3% and 8.1% respectively since the beginning of December.
Iron ore supply disruptions in India, the world’s third-largest exporter, tightened the market, according to the Financial Times. FoB mine prices reached $177.90/mt. The previous peak was set in April 2008 just above $205/mt. India’s Karnataka state decided to ban iron ore exports, which accounts for about a quarter of India’s annual exports of more than 100 million mt. The state of Orissa, which accounts for a fifth of India’s ore exports, also said recently it was considering a similar ban. Meanwhile, some iron ore projects in Australia and Brazil are facing delays from seasonal weather patterns.
According to preliminary data from the International Copper Study Group (ICSG), for the first 10 months of 2010 the market is experiencing a production deficit of around 400,000 mt (a seasonally adjusted deficit of 213,000 mt). This compares with a production surplus of 32,000 mt (a seasonally adjusted surplus of about 210,000 mt) for the same period in 2009.
During the first 10 months of 2010, world apparent usage of copper grew by 7.5% (approximately 1.1 million mt) compared with that in the same period of 2009, principally owing to recovery from weak 2009 usage levels in the European Union (EU), Japan and the United States, where usage grew by 11%, 24% and 7%, respectively. Chinese apparent usage increased by a more modest 3.6% from the very strong apparent usage level during the same comparative 2009 period. World refined usage ex-China increased by 10% over the same periods.
World mine production (of copper) in the first 10 months of 2010 remained practically unchanged compared with the same period of 2009 (+0.5%). Concentrate production remained the same while solvent extraction/electro-winning (SX/EW) grew by 2.2%. Production in Chile, the largest world producer, grew by a modest 0.7%, but was still 2.4% below that in the same period of 2007. Output from other major producers such as Peru, the United States, Australia and Indonesia, that combined represent around 25% of total world copper mine production, decreased by an aggregated 7%. The mine production capacity utilization rate in the first 10 months of 2010 was around 79.7%, reflecting the underperformance of mine production.
The average LME cash price for December 2010 was a record-high $9,147.26/mt, up from the November 2010 average of $8,469.89/mt. The 2010 high and low copper prices were $9,739.50/mt (Dec. 31) and $6,091/mt (June 8), respectively, and the average was $7,539.32/mt. As of the end of December 2010, copper stocks held at the major metal exchanges totaled 568,182 mt, a decrease of 119,509 mt from stocks held at the end of December 2009.