Recent angst among analysts, pundits, mavens, gurus, savants, wizards, and other assorted talking heads has China plummeting toward a “hard landing”. These views in combination with the on-going and never-ending worry over the euro, the currency without a country, have weighed heavily on the entire resource market since the first of May.
Oil, gold, and copper, the world’s benchmark energy and metal commodities, have shed roughly 10% of their unit values this month. Most experts have adopted a very bearish outlook to the point of jumping on the doom and gloom bandwagon and have not considered these drops as simple market corrections.
Not I, sayeth The Mercenary Geologist. My current opinion is best illustrated by the 2011 supply and demand fundamentals of Dr. Copper, Ph.D. Economics:
- Mine supply: 16.0 million tonnes of copper.
- World production: 19.7 million tonnes of copper, including secondary refined scrap.
- World usage: 22.1 million tonnes, including recycled scrap.
Ergo, we used 6.1 million more tonnes of copper than we mined last year.
This chart shows the annualized 4% growth of copper supply since the widespread advent of electricity in industrialized countries starting in 1900. The steeper growth curve beginning in the mid-1990s can be attributed to emerging market countries, mainly in Asia, demanding electricity for their massive populations. Also note the increasing role of cheaply processed oxide copper by acid leach, solvent extraction, and electrowinning versus concentrated and refined sulfide copper: