A global copper surplus currently in the making is expected to get worse over the next 18 months as market disruptions have created greater uncertainty in the factors affecting supply and demand for the metal, a market’s insider report shows.
According to the International Wrought Copper Council (IWCC), which represents copper and copper alloy producers, supply is expected to surpass demand by 285,000 tonnes this year as a result of coronavirus-related disruptions. The figure would likely rise to 675,000 tonnes in 2021, the industry body said.
“These are unprecedented times and the copper industry is not immune from the impact of the COVID-19 pandemic,” the IWCC said.
The report confirms a plot twist for copper, which was supposed to thrive this year amid a projected supply deficit.
Demand for the metal, widely used in construction and increasingly in the electric vehicles (EVs) sector, is forecast to fall by 5.4% this year, the IWCC said. The industry body, however, believes demand could rebound by 4.4% in 2021.
In China, the world’s largest consumer of the metal, refined copper demand will slide 2.8% to 11.87 million tonnes this year. In 2021, however, it should rise by 2.6% to 12.175 million tonnes in 2021, according to the IWCC.
Refined copper production this year is forecast to be 22.91 million tonnes against the demand of 22.625 million tonnes. In 2021 output is seen climbing to 24.3 million tonnes, with demand at 23.625 million tonnes.
In Europe, refined copper consumption is seen falling by 6.4% in 2020 before climbing 5.4% to 2.927 million tonnes next year.
In North America, including the United States, Canada, and Mexico, refined copper demand this year is expected to slip 6.9% to 2.223 million tonnes before registering a 5.3% upturn in 2021.
IWCC based its estimates on publicly available information and input from the International Copper Study Group (ICSG), a global research and marketing body.
On May 19 prices for the metal hit their lowest since January 2016, with three-month copper futures on the London Metal Exchange (LME) touching $4,371 per tonne. That’s down from a high of around $6,340 per tonne in mid-January.
Unlike gold, considered a safe-haven asset, copper remains largely ruled by laws of supply and demand. With mines shutting down or curtailing operations and global economic growth projections being tossed aside amid the coronavirus pandemic, both supply and demand of the red metal continue to be severely affected.
View: More News