Why Copper Prices Are Going To Triple Over The Next Decade

After nearly five years of economic hardship, the world copper industry is, in our opinion, about to enter a period of considerable strength. This opinion is based on three main propositions, namely: 1) there are a number of reasons, both general-economic and industry-specific why copper demand is likely to perform significantly, more strongly in the 1980's than in the 1970's; 2) the virtual cessation of investment in new facilities, especially at the mine level, over the past years makes it physically impossible for capacity to expand as fast as demand in the mid-1980's; and 3) there is much less "excess" inventory available than most analysts believe. If we are correct in these assumptions, then the implication is that copper prices will climb up to, and possibly beyond, the cost-justified price level. Combined with general inflation, this suggests a price in excess of $2/pound by 1985 or roughly treble the 1978 average.