Morgan Stanley Says Copper Price to Rise 7.6% in 2013 on Demand

Copper prices will advance 7.6 percent in 2013 from last year as demand in China, the U.S. and even Europe is forecast to rise amid a supply deficit for the metal, according to Morgan Stanley.

The bank projected copper prices to rise to $8,554 a metric ton, or $3.88 a pound, in 2013 from $7,952 a ton in 2012, analysts Peter Richardson and Joel Crane wrote in a report today. They forecast the price to decline to $8,157 a ton in 2014 and $7,496 in 2015.

Morgan Stanley raised its Chinese copper demand forecast to 8.4 percent year-on-year from 6.7 percent and expected further 5 percent growth in 2014. The bank forecast U.S. construction and auto manufacturing to be supportive for copper demand and Europe’s economy to see a moderate rebound in the second half of 2013.

“China’s industrial production cycle turned up in the fourth quarter of 2012, with infrastructure-related demand and non-ferrous metal output contributing strongly to increased output and higher orders,” the analysts said. “We believe this improved position will strengthen further in 2013, particularly as widespread industry de-stocking of finished products appears to be ending.”

Global demand will exceed supply by 17,000 tons in 2013, the fourth straight annual deficit, it said. The market had a 45,000-ton deficit in 2012.

Copper for three-month delivery fell 0.4 percent to $8,103 a ton on the London Metal Exchange yesterday.

Morgan Stanley projected LME cash aluminum price to average at $2,221 a ton in 2013 compared with $2,052 in 2012, lead to average at 2,353 a ton versus 2,073, nickel to average at 18,050 a ton versus 17,584, tin to average at 24,333 a ton versus 21,103 and zinc to average 2,155 a ton versus 1,965.