Metal bubble

10 April 2006 By Edward Hadas Follow @edwardhadas

A price of $2,800 less than half of today s level would be high enough to get production up to the future level of demand. But a small shortage and easy money have pushed up the price. Money, not metal demand, is likely to pop the bubble.

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The price of copper has increased 27% in 2006, from $4,536 per tonne to $5,828, as of Friday. It was selling at $2,349 per tonne in the beginning of 2004, which was then the highest price since July 1997.

Copper producers should expect an average copper price of $2,750$2,850 per tonne between now and 2030, according to Bloomsbury Minerals Economics. That is in line with the average price, adjusted for inflation, since 1989. The calculation is based on expected costs of extraction and refining.

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