Capital expenditure in the global copper industry has remained sluggish in recent years. Due to the increasing difficulty and cost of mining copper, future new supply will be more dependent on the large leading companies. However, due to the scarcity of high-quality large-scale projects and the low return on investment ratio, the willingness of these leading companies to invest is not strong. This trend is expected to continue, leading to a further decline in global copper investment growth.
Copper concentrate supply is facing challenges and production growth is limited
Recently, there have been a number of volatile factors in the global supply of copper concentrates. First Quantum's Cobre copper mine, for example, has been shut down due to a contract dispute with the Panamanian government. In addition, Anglo American also announced that it will lower its copper concentrate production forecast for 2024 and forecast that production will continue to decline in 2025. These factors have combined to affect the global supply of copper concentrate, which is expected to be difficult to achieve significant growth in global copper concentrate production in the next few years.
Chinese consumption continues to grow, and the global refined copper market is tightly balanced
Despite the poor performance of the real estate sector in 2023, China's refined copper consumption still shows strong growth momentum. This is mainly due to the steady contribution of new energy, power and home appliance industries. According to SMM and CRU research data, in 2023, China's refined copper consumption increased by 6.4% year-on-year, and the global refined copper incremental consumption was mainly contributed by China. It is expected that in 2024, China's new energy and power industries will continue to develop steadily, providing a driving force for the growth of global copper consumption.
The risk of recession in Europe and the United States is increasing, but Chinese consumption will remain stable
Despite the possibility of a material recession in the US and Europe in 2024, the performance of emerging markets such as China is expected to remain stable. Against this backdrop, the global refined copper market is expected to shift from a substantial surplus to a balanced state.
Copper price forecast: Choppy strengthening
For the trend of copper prices in 2024, it is expected that in the first half of the year, under the influence of domestic and foreign macro factors, copper prices may be volatile and weak. However, in the second half of the year, with the release of macro risks and the market's expectations of the Federal Reserve's interest rate cut and China's new round of stimulus policies, market sentiment will be boosted, and copper prices are expected to be volatile and strong. For the whole year, the core fluctuation range of copper prices is expected to be $7,500 to $9,000 / ton, and the domestic copper price is 62,000 to 72,000 yuan/ton.
