01 April 2011, 9:31 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- Barclays Capital analysts say the supply-side picture remains bullish for copper prices. The metal has given up some of its early-year gains as the market reassesses the demand. “Perhaps what is more important and being neglected is…how dire the mine supply-side picture is shaping up in 2011,” Barclays says. The bank looks for 16.1 million metric tons of global mine output this year, which would be a “negligible” gain of 100,000 tons. “It was already well expounded that output declines at Escondida, Grasberg and Batu Hijau mines would amount to close to 370Kt of lost material that would have to be counteracted before any incremental growth was achieved,” Barclays says. Furthermore, the bank notes, Codelco has said that production would be essentially flat in 2011 after previous expectations for moderate growth. Also, the latest data for Chile showed a 7% year-on-year decline in February, while Peruvian production fell to a three-year low during the same month. “The conclusion then is one should expect barely anything in terms of mine output growth, and even the possibility that it could contract,” Barclays says.