Copper prices will come under “downward pressure” this year as supply growth starts to come through and demand slows, according to Wood Mackenzie Ltd.
Ore grades are expected to return “to normal” at some larger mines next year and in 2015, Steven Lewis, senior copper analyst at Wood Mackenzie, said today at Metal Bulletin’s 26th International Copper Conference in Madrid.
Higher prices for the metal used in pipes and wiring are inflating production costs by fueling local-currency values, according to Wood Mackenzie. Capital spending increased to 40 percent of total costs in 2012 from about 20 percent in 2004, estimates by the researcher and consultant show.
Squeezed margins might limit funds to develop new mines, particularly for some smaller projects, according to Lewis. Still, risks of increased royalties and taxes seemingly aren’t deterring new projects in Peru and Zambia, he said.
Peru is the world’s third-biggest copper-producing nation and Zambia ranks first in Africa. The metal for delivery in three months fell 2.7 percent this year on the London Metal Exchange.
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