UK-based Barclays Capital is bullish on the copper outlook for 2010, expecting the commodity”s price to increase to USD8,000/ton in the first half of the year. Its research team forecasts that copper prices will increase to record highs in the next couple of years. They are anticipated to average USD6,875/t this year, rising to USD7,000/t next year and a high of USD8,500/t in 2012.

The optimistic price forecast was seen against a very low base of USD3,200/t experienced in 2009. Although copper demand was down 10% year-on-year in 2009, global copper demand was growing again.

Chinese demand for copper was still robust and imports of the metal were rebounding, which was supported by steady construction and infrastructure activity in the country. However, it was expected that China would import one million tons less copper this year as it cut back on purchases of refined copper because of expanded domestic refinery capacity. China had also built up its stock levels of the metal. The decrease in Chinese imports would be offset by strong demand from OECD as indicators pointed to a strong OECD demand rebound in 2010.

While demand was increasing robustly, supply would be constrained in the future. Mine output was growing, but there were few major mine projects coming on stream in the next two years. The seven top copper producers’ forecasts showed a decrease in capital spend on copper production from a peak of USD40 billion in 2008.