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Copper Deficit May be 600,000 Tons, JPMorgan Says

The world refined copper market is expected to have a 500,000-metric-ton to 600,000-ton deficit in 2011, even with a significantly weaker demand scenario, according to JPMorgan Securities Ltd.

Disruptions last year seemed to have wiped out most of mine supply growth, metals strategist Michael Jansen told a conference in Shanghai. “As demand further recovers into 2011, supply-side issues will become more influential,” he said.

Copper for delivery in three months in London advanced to a record of $9,754 a metric ton on Jan. 4 after rising 30 percent last year as the improving global economy and rising investment demand for commodities prompted buying. The International Copper Study Group is expecting a 435,000-ton global deficit in the refined metal this year.

While current prices are sufficient to encourage brownfield and greenfield developments, longstanding issues, including capital availability, relative merit of projects, resource nationalism, and geotechnical issues, remain key impediments for supply increase, said Jansen.

“Copper is also increasingly being seen as scarce and is in many ways adopting some store of value attributes normally associated with precious metals,” he said in his presentation.

Jansen said his current forecast for the average London cash price is $9,713 a ton this year. In slides shown earlier at the conference he had predicted $9,000 a ton.

Copper closed 0.4 percent higher at $9,650 a ton yesterday on the London Metal Exchange.

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