Copper, unlike gold, has industry as its primary engine, and the global industrial outlook is slow, currently, and for the next year. Until global economies improve, the demand for copper will remain weak and the price will fluctuate between $3500 and $2200 per ton. Positives for copper are decreased costs of production, and the economic stimulus interventions of various governments which should stimulate production of goods, at least short term.

I do not think the global economy will slip into a depression, but depending upon how politics plays (socialists tend to regulate industries to their demise), it could be a short recession. The USA is still not technically in a recession, but should meet the technical definition of 2 quarters of negative growth soon. I think the downturn could be short, and if this is the case, copper will have a short downturn period. The time factor of the downturn depends upon how economies are treated by the respective governments. Bad political decisions will reflect badly on the global economy. The USA has just elected a socialist leaning government , and this usually spells doom for a market driven economy. If the socialists have their way, the industrial complex of the US will change radically, for the worse, and copper may fall below $2200 per ton. Hopefully, there will be enough in government to pull it towards the center and not let the country to slip into socialism, with big government controlling every facet of the economy. If not, doom and gloom will prevail, economically, and gold will replace the USD as the currency of value.

China Copper

Jiangxi Copper Group's new copper smelting project will produce 300,000 tons of copper cathode per year, and is due to start up in August 2007. Jiangxi officials said this huge smelter will not affect the copper market, because all of the copper will be used internally in China.

Copper for the smelter will primarily come from imported copper concentrate and scrap copper to supply the 300,000-tonne crude copper line. Copper concentrate for will be mainly sourced from Chile, Mongolia and Indonesia.

China's copper smelting capacity will reach between 3.2 million and 3.3 million tons this year, and copper prices will fluctuate around current levels in the near future. The August copper delivery price in Shanghai was 8,341) per ton (July 5, 2007).

(April 27,2007)

The copper output this year (2007) is projected to be 17,820,000 tons from global mining operations. Although global economies are slowing (except for China, growing at 11%/Year), 2007 is projected to be another good year for copper. At the current $3.65/pound for copper, it is at historic levels, and will probably not change much during 2007. The 1,342,000 tons of copper produced in the US (Utah, Nevada, Arizona, New Mexico, Montana) is at the highest production volume since 2001. Domestic copper use is projected to decline, due to the slump in the housing and construction industry, but strong global demand is expected to keep supplies tight and prices up for the remainder of the year.

Cerro Verde Expansion

The Cerro Verde porphyry copper mine in Arequipa is operated by Sociedad Minera Cerro Verde S.A.A., a Peruvian subsidiary of Phelps Dodge,is one of the world's largest producers of copper and molybdenum. Major ores mined are Chrysocolla, brochantite, chalcocite and chalcopyrite. The mine is currently undergoing a large expansion, as described in the Phelps Dodge Press Release.

"Cerro Verde is undergoing an $850 million expansion that will permit mining a primary sulfide ore body beneath the oxide ore body currently in production. Through the expansion, approximately 1 billion tons of sulfide ore reserves averaging 0.51 percent copper will be processed through a new concentrator. Mining of the sulfide ore body is expected to begin in late 2006. The expanded copper production rate should be achieved in the first half of 2007. Current copper production at Cerro Verde is approximately 100,000 tons per year. After the expansion, copper production initially will approximate 300,000 tons per year."

When this expansion is completed, later this year, it should help alleviate a little of the current copper shortage, but will not reflect upon pricing much, since demand is much larger than the 300,000 additional tons that will be supplied by the expansion project.