Various noted market commentators were interviewed at the 16th annual Mining Indaba in Cape Town this week and the sentiment appears to be largely bullish. Playing safe most predictions were pitched at the long term such as Kevin Norrish, Managing Director of commodities research at Barclays Capital who said he could see prices rising steadily in 2010 and through into 2011 due to demand from China and the “financialization of the metals sector. By which we take him to mean the flows of investment money into metals commodities. “China’s commodity demand has reached critical mass, with global demand for copper from China rising to 35% last year from 15% in 2001. China is the most important factor in copper and commodity production, he said in a local paper www.businessday.co.za, “We expect price increases to hit fresh highs by 2012, driven especially by insatiable demand from China as well as an expected rise in demand from members of the OECD. Norrish went on to say he expected the copper market to be in deficit in the next couple of years and prices to reach US$8,000 per metric ton.
Iron ore was also singled out for attention, this time by Magnus Ericsson of Raw Metals Group who observed China’s steel demand would drive iron ore imports up by 10% this year and the new benchmark would be 10-15% higher than last year we would pitch it higher than that but we will see.
Guy Elliott, CFO of Rio Tinto was particularly bullish for the long term saying to Reuters economic growth in China would double global demand for aluminum, iron ore and copper over the next 15 years. Rio is said to be increasing iron ore production by 10% in 2010 over 2009 but interestingly still have some of their aluminum smelters running at below capacity.
Last, on precious metals Tom Kendal, a precious metals strategist at Mitsubishi said platinum would reach $1,700/ounce in H2 2010 on the back of a global recovery in vehicle manufacturing and increasing emissions regulations.