Citigroup says copper fever may raise the temperature for Australian miners – by Myriam Robin (Sydney Morning Herald – February 22, 2017)

Copper prices may soar to $US8000 a tonne, or $US3.60 a pound, by the end of the decade according to Citi analysts, who have also upgraded their forecasts for a number of Australian miners highly exposed to the commodity.

The spot price of copper has risen strongly over the past year, particularly since October. It’s up 30.3 per cent on February last year, last trading at $US6045.50 a tonne.

Copper, the world’s third most widely-used metal after iron and aluminum, is used in cyclical industries such as construction and industrial machinery manufacturing. For this reason, copper is seen by many as a key leading indicator of global growth and even has the nickname “Dr Copper”, a reference to its use as an economic barometer.

Citi analysts expect demand to outstrip supply and push peak prices to $US8000 a tonne by 2020. Average prices are forecast to be lower, at $US7115 a tonne by 2020, or $US3.16 a pound, after rising 8.3 per cent this year and a further 5.8 per cent in 2018.

“The combination of stronger-than-expected Chinese demand, a clear lack of visible copper inventory build, an end to cost deflation, and the US-centric reflation story after the Trump election victory sparked positive price momentum through the latter stages of 2016,” the Citi analysts said in their report.

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