African demand tightens metal markets

We all know that Africa is a crucial source of supply of copper, aluminum and other metals that the world needs. But a note from Desjardins Securities analysts John Redstone and John Hughes shows that Africa is an important source of demand as well.

They produced data showing that the amount of metal production from Africa that could be exported is expected to fall in 2011 for most base metals. That is purely due to growing domestic consumption.

“If the region continues its steady path toward industrialization, we can expect double-digit growth in metal demand to continue for many years to come,” the analysts wrote in a note to clients, adding that the continent should have economic growth of roughly 5% in 2010 and 6% in 2011.

Africa only accounts for about 2% of world demand for metals, so it is not a major factor. However, the analysts do expect growing African metal demand to contribute to the “overall tightness” in metal markets.

Their data suggests that Africa will have less aluminum, zinc and nickel available for export in 2011 than it does this year. Copper is an exception, as there is expected to be more available next year as new mines increase their production capacity （though they also pointed out that various challenges in the region could prevent these mines from ramping up production as much as expected）.