Market Concerns Increase Around Copper
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Market Concerns Increase Around Copper

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Paloma Duran By Paloma Duran | Journalist and Industry Analyst - Thu, 05/05/2022 - 14:21

Although copper is expected to benefit significantly in the coming years as it is considered one of the key metals for the world's green energy transition, the metal has been affected by external events such as China’s COVID-19 restrictions. Consequently, the International Copper Study Group (ICSG) has lowered some of its outlooks for 2022.

The relevance of copper has grown so much in recent years that now is considered the "new oil" for rapidly developing industrial sectors such as electric vehicle (EV) batteries and renewable energy infrastructure, reported Goldman Sachs. In an interview with MBN, Ralph Shearing, CEO, Altaley Mining, said base metals are experiencing something of a boom: “The long-term projections for copper are fantastic because of the global push for decarbonization and the reliance on copper as a key material. We see major opportunities.”

In 2021, copper prices increased significantly. It reached record highs in March 2022 of US$10,848, when the war between Ukraine and Russia began. However, it has now decreased by 12 percent. "The mood has turned gloomy due to slowing manufacturing activity, COVID-19 shutdowns and the war in Ukraine, which is driving up energy prices and hurting the industry," said Daniel Briesemann, Analyst, Commerzbank.

Due to these market concerns, the ICSG updated its outlook for copper in 2022. Global demand is expected to fall 1.9 percent. However, global production is expected to increase by 4.3 percent in 2022 and 3.6 percent in 2023, mainly due to new mines and a more manageable global pandemic. Consequently, the world copper market is expected to record a surplus of 142,000 tonnes in 2022 and 352,000 tonnes in 2023.

Experts believe the decline in demand could help better balance supply and demand for the metal. However, the experts stressed that the reduction in demand was not the best scenario, but that the mining companies improved their production rates. Previously, Steve Robertson, CEO, Infinitum Copper, told MBN that on the supply side, the mining industry is struggling to replace the depleting mines as newly discovered deposits tend to be smaller, lower-grade and more to work with. “Today, many of those mines have been exhausted or are in the late stages of mine life at a time when the need for copper has never been greater. So, the pressure is on for the exploration community to come up with the next generation of discoveries and with a rising copper price, a substantial effort is underway.”

Photo by:   Ra Dragon

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