With demand for copper from China being supported by their government’s stimulus package coupled with recovery in global economic activity, the 2020 copper price forecast has been revised to $6,000/mt from $5,900/mt by Fitch Solutions Country Risk and Industry Research. The rating firm shared that the copper prices will remain elevated due to the persistent deficit of copper driven by the increased demand from the power, construction and auto industries.
Fitch 2021 forecast for the average copper price has also been raised to $6,300/mt from the earlier $6,100/mt. Fitch report, however, cautioned that investors may react to the latest economic indicator release, shutdowns that may be announced due to the second wave of COVID-19 news and the upcoming US Presidential election outcome in November 2020.
The Chinese refined copper imports have gone up to keep up with the increase in domestic demand. The global economic recovery will reinforce copper demand growth in 2021.
The copper concentrate production will go up over the coming quarter and copper mine out will also go up in 2021. This may be disrupted in case of lockdown measures.
The report added that Freeport McMoRan’s Lone Star project in the US and BHP’s Spence Growth Option in Chile will boost global copper availability.
The rise in copper concentrate output will lead to a rise in treatment charges. This will lead to the growth in refined copper output. Fitch report mentioned that at the end of the forecast period this trend will be strongest.
The report foresees copper market to be in deficit driven by the growth in the consumption rates till 2029. The demand for copper will be seen in automotive infrastructure and power sector.
The average global copper consumption will grow at 2.2pc, outpacing the average production growth of 1.7pc annually from 2021 to 2025.
China will continue to remain the largest consumer and will constitute 52-53pc of global copper demand as its power and construction sector grows, fuelling demand for the metal.