Bernstein senior analyst, Paul Gait, sees a huge copper supply deficit arising over the next few years.
While most mainstream bank analysts don’t see it – perhaps being too fixated on current spot prices in their analyses – global research and investment management group Bernstein senior analyst, Paul Gait, looks to the medium- and long-term view and sees a massive copper supply deficit building over the next few years and reaching as much as 1.5 million tonnes by 2018.
Speaking at the Natural Resources Forum Latin America meeting held at London’s Royal Institution, Gait also commented that he does not see the China dominated supercycle as being over, but only about a third into its full course. This suggests a major turnaround in the copper price, which is currently languishing at around the $2.60/lb ($5,700/tonne) mark, over the next two to three years.
These are controversial statements going hugely against much current thinking, but he makes some good points on his way to this prediction, but does warn that copper frequently seems to confound analysts’ predictions both on the upside and downside.
At the moment Gait says that cash mining costs are on average close to the copper price itself but that historically base metals, apart perhaps from aluminium, tend to trade at a substantial premium to cash costs – and copper particularly so to normally average 50% above costs.