Barclays Capital sees record high copper, tin 2011

Copper and tin prices could hit record high annual average prices in 2011 on a strong consumption outlook and supply tightness, Barclays Capital said in a note on Thursday.

"Copper and tin have the greatest price upside, given that both these metals face severe mine supply constraints," the bank said.

For copper in particular, robust demand from China will help drive global inventories to all-time lows early next year, Barclays said, a key driver behind price gains.

Barclays expected copper prices to average $8,000 a tonne in the fourth quarter of this year. Benchmark copper on the London Metal Exchange traded at $7,855 a tonne at 1412 GMT on Thursday. It reached a record high of $8,940 in July, 2008.

Copper stocks held in LME-registered warehouses hit historic lows below 30,000 tonnes in July 2005, just a fraction of the global market forecast at 19 million tonnes this year. 

Since February, these stocks have dropped by one third to 380,125 tonnes from February's six-year highs of 555,075 tonnes.

China is the world's top consumer of base metals, accounting for roughly one third of global demand for the metal used in power and construction last year.

Barclays expected tin to average at $22,250 in the fourth quarter of the year, rising to just shy of $27,000 by the end of the second quarter, 2011, due to protracted supply constraints out of top tin exporter Indonesia. 

Indonesia's refined tin exports in August fell 5.6 percent from the same month a year ago as heavy rains hampered mining, continuing a trend of declining output this year. 

The rains could cut refined tin output by 20 percent this year to around 80-85,000 tonnes, in line with analyst forecasts, Indonesia said. 

On the LME, tin stood at $23,475 a tonne at 1351 GMT, down from two-year highs of $23,800 hit last week. Source: Reuters