Here’s how Bloomberg kicked off its report on Codelco chief Arellano’s speech to Chilean mining industry people today:
Dec. 15 (Bloomberg) — Copper prices will be “depressed” next year and demand almost “stagnant” as the international economic crisis leads to higher stockpiles of the metal, Codelco Chief Executive Officer Jose Pablo Arellano said. Demand won’t recover until 2010, Arellano said today in a speech yada yada continues here
Depressed? Stagnant? Economic crisis? Higher stockpiles? “Jeesh Otto”, I hear you sigh “what’s so great about this news?” That’s easy, oh kind and gentle lector of IKN: Chileans famously and magnificently suck at predicting the copper market. Here’s a little chart showing how Cochilco, the official Chilean gov’t copper think-tank people have called the market over the last four years.
- In February 2005, they said copper would average U$1.18/lb for that year. It averaged U$1.67/lb (Norvege, nul points)
- In February 2006, the Cochilco prediction was U$1.74/lb. The final result was U$3.04/lb (oh how they laughed)
- Stopped clock year was 2007, as Cochilco’s $3.20/lb forecast missed by just three cents (U$3.23). (lucky)
- But by this year they were back on full form. In July Cochilco adjusted its forecast upward 30c to $3.70/lb for the year. Oops! With just a couple of weeks left on the 2008 calendar, it looks like copper will come in at around $3.08/lb. (DOH!)
So on to 2009, and in November Cochilco slashed its 2009 forecast to $1.65/lb (from $3.10). Now with Arellano basically agreeing by calling $1.60/lb today the stage is set for an almighty rally. You’d better thank those boffins from Santiago when copper rushes back over $2/lb and sets sail skywards after the Chinese New Year (I hope).