The International Copper Study Group made a curious forecast: according to it, production of copper on the planet in the current year will increase by 2.6% to 26.317 million tons, its consumption will grow by 1.4% to 26.431 million tons. Thus, by the end of 2023, the global market is expected to be short of copper in the amount of 114 thousand tonnes.
The International Copper Study Group estimates that the deficit of copper will be due to increased demand on the part of China (it is the largest consumer of copper) after it refused from the zero tolerance policy to coronavirus and related extremely strict quarantine measures, which willy-nilly caused economic recession and sluggishness of Chinese industry. Expanding orders for copper in the US, the European Union and Japan will also contribute.
Therefore, copper consumption in China in 2023 will increase by 1.2%, in the European Union – by 1.8%. International Copper Study Group does not provide data for the US and Japan, but it seems that the growth rate of demand for copper in them will also be quite good.
In principle, we can agree with the International Copper Study Group’s forecast, taking into account the real situation in the key consuming countries and the trends observed in some industries and energy sectors. In my personal view, the main drivers of orders for copper will be manufacture of cable and wire products (copper cables and wires can’t be fully replaced by optical fiber), electric cars (average copper content in them reaches 80-100 kg per one car) and generators for wind power stations.
Difficulties in supply of ores and concentrates to copper smelters, mainly in China, due to postponement of several mining projects in Africa and South America, not to mention unforeseen circumstances – collapses in mines and open pits, strikes – should not be discounted.
Accordingly, the price of copper on London Metal Exchange by the end of the year may go up to $9-9.5 thousand per ton, benefiting its producers and, above all, if we are talking about Russia – Norilsk Nickel. Most likely, a rise in the price of copper would have a positive impact on its stock price shortly.