The copper market is very tight, and according to analysts at UBS Securities, it is going to get even tighter.

With rampant supply disruptions and very low inventories, the analysts have revised their view and are now forecasting deficits of 100,000 tonnes in 2008 and 2009. They were previously expecting surpluses of 300,000 tonnes this year and 100,000 tonnes next year.

Everyone knows that the demand from China and India remains strong and is a big driver for the copper market. But according to the analysts, the bigger risk today is supply disruptions, which are already happening and could get a lot worse.

"The risk of significant disruptions [particularly in Chile and the African copper belt] to forecast output are very high. Labour, maintenance, weather, grade, and increasingly energy are combining to make copper mine supply one of the most precarious of any of the base metals," they wrote in a note to clients.

They go on to discuss a number of supply risks, but two that clearly stand out are power concerns in Chile and Zambia and political risk in the Democratic Republic of Congo.

Meanwhile, global copper inventories add up to just 1.8 weeks of consumption, the lowest of any base metal. That could make the market incredibly tight if there is a significant supply outage, they wrote.

With all that in mind, the UBS analysts are upgrading their 2008 copper forecast to US$3.50 a pound (from US$3) and the 2009 forecast to US$4 (from US$3.40). The 2010 estimate is a whopping US$4.50 a pound.

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