Significant spike in 2008 copper price

Credit Suisse has joined in speculation over the future price of copper with the issue of a comprehensive report looking at 2008 market trends.

The bank’s analysts have based their conclusions on the study of 66 copper projects currently under way, or planned.

The projects have the potential to collectively produce over eight-million additional tons of copper by 2015, but the report concludes that “a significant spike” in 2008 prices is still possible and that prices could exceed $3 lb as a result of undersupply.

Over the past ten years, annual demand for copper has increased on average by 3.9%. Forecasts for 2008 indicate that supply will only feed an additional 2.3% into the market.

Looking at the longer term, the Credit Suisse analysts predict that the demand-supply ratio will reverse and that annual global copper demand will need to increase by over 4.3% to maintain a stable market.

However, these predictions assume that all 66 new projects reviewed will come in on schedule and this is unlikely because of ongoing global labour and equipment shortages.

The projects also require an investment of $66 billion and could be adversely affected by low grades and political and infrastructural risk, particularly in the case of Central African prospects.

These and other factors could be instrumental in reducing long-term supply growth to only 3.6% a year.