- Supply side issues persist in copper
- Oil prices expected to range trade
- Updates on Australian developers and contractors

By Chris Shaw

The current focus in the copper market is on downside demand risks in China, the US and Europe but Macquarie suggests it is important to remember ongoing poor supply performance has also been an important contributor to market tightness.

On Macquarie's numbers, global mine production growth has averaged only around 1.5% per year since the copper price began to boom in 2005. The current year is not expected to be any exception, as mine production is likely to show little growth in 2011 thanks to nearly 600,000 tonnes of supply losses.

Much of the lost supply can be attributed to a strike at the Escondida mine, but Macquarie notes Chinese production was down 8.7% a year in August and total Chilean production has fallen 5% in year-on-year terms for the first eight months of the year.

Challenges to supply increases such as declining grades and project delays are expected to continue, so there is no change to the forecast of a small deficit between global supply and demand in 2012. The size of the deficit will depend on both supply performance and the extent of any Chinese re-stocking.

In oil, JP Morgan sees a number of factors potentially impacting on the path of the oil price into 2012. On the supply side these include the return of supplies from Libya, with scope for output from that country to reach 1.3 million barrels per day by the end of next year.