Copper prices continue to rise but the uptrend is not enough to trigger a new supercycle, according to Cochilco. Economic recovery in China and successful vaccination drives in European and American nations have helped the rise of copper prices since February, stated a Cochilco report. While the political and tax-related uncertainty in Chile is less likely to drive a new supercycle, but may boost prices in the short term.
Cochilco also undermined the view that the rising popularity of electric vehicles and renewable energy will support higher copper prices, which could enable the start of a supercycle. The commission believes the increase in interest rates and public debt due to the impact of the COVID-19 pandemic in the US and China will reduce financial aid and push up taxes curbing progress.
On average copper prices are forecast at $4.30/lb in 2021 and $3.95/lb in 2022. Cochilco is of the view that the copper market will hit equilibrium by 2022 as the global refined copper production this year is expected to be at a deficit of 145,000mt while reaching a surplus of 46,000mt in 2022.
Global copper demand will be 24.2mn mt by the end of 2021, up by 3.4pc from 2020, and will rise to 25.1mn mt in 2022, whereas production is expected at 21mn mt in 2021, up 2pc from 2020.
Cochilco expects Chile’s copper output in 2021 to be up 1.8pc to approximately 5.8mn mt million tons.