Wednesday, October 01, 2008

Copper Outlook and Fundamentals

The following slides are from a presentation made by Jeremy Gray of Credit Suisse Research during the 2008 Commodities Day Conference held on 23 September, 2008.

5 Year Copper Price Chart - Making Higher Lows



Average Cash Costs of Copper Majors Have Risen By 21% YoY But Costs Are Expected to Slow Due To A Falling Sulphuric Acid Price



The Largest Copper Mines In The World, BHP Biliton's Escondida and Freeport-McMoRan's Grasberg Mines Have Been Declining In Production and Grade Over The Last Few Years



The Bear Case For Copper Assumes A Big Build In Inventories And Copper Equities Are Pricing In $1.5/lb for Q4'08 and 2009 - Take A Peek At The Various Growth Scenarios Outlined Below And Judge For Yourselves



LME Copper Price Vs. LME Inventory



The 5 Largest Mining Companies In The World Have Plans To Build Iron Ore and Coal Mines In Their Pipeline But No Copper Mines ...



Copper Mines In The Democratic Republic Of Congo Have An Average Ore Grade Of 2% Compared To 0.58% For The Rest Of The World But Supply Keeps Missing



The Average Capital Costs To Build Copper Mines In The Democratic Republic Of Congo is $5,035/t Compared To $8,128/t For Other Projects But The Country Has Infrastructure Issues



So Is The Stage Set For China Restocking It's Copper Inventories ?



5 Reasons Why Copper Can Hit Credit Suisse's Brave New World Target Of $12,000/t (Which Is Approximately A Double From Current Prices)