Copper demand forecasts and predictions of future scarcity

Abstract

Several studies dealt in the past decades with future predictions of the copper demand, motivated mainlyby potential copper shortages that could arise due to insufficient reserves. It is known that there was never ashortage of reserves in order to satisfy demand in the last century and up to the present time. This paper addressestwo questions. Did these concerns arise due to excessive demand forecasts, or due to stagnating reservesassumption, or due to both aspects?The article evaluates some of these predictions of future copper demand and compares forecasts with thereal metal demand that materialized in past years. Also, it analyses the reserve assumptions of several studiesand compares them with what really happened with copper reserves. In the case of recent forecast modelsthat span into future years, whose copper demand is not known yet, a backcasting method was used inorder to estimate forecasts, which consists of applying the model in the past.Five out of the seven models rerun in the original periods overestimated demand and two out of them consideredthat reserves were a fixed stock. Also, the two models studied by the backcasting method consideredthat reserves were a fixed stock. The four models that considered reserves as a fixed stock run out of reserves,irrespective of whether they overestimated or underestimated demand. These results suggest thatpredictions of a future scarcity of copper could be mainly attributed to the assumption of a fixed stock of reservesand not necessarily to overestimations of demand. The remaining five models did not consider the futureavailability of copper.