Copper market likely to be in surplus in 2022

The global refined copper market is expected to be in a significant surplus in 2022, following a small supply deficit in 2021. The refined copper market saw a deficit of 479,000 tonnes (mt)  in 2020, according to the International Copper Study Group, or ICSG. ICSG expects a small deficit of 42,000 mt in 2021, with 2022 supply forecast to exceed demand by a colossal 328,000 mt.

The 2022 surplus is based on the assumption of a 3.9% increase in refined output, the biggest increase in eight years, with copper demand expected to see a 2.4% increase, ED&F Man Capital Markets said in a note on December 7.

According to ICSG, mine output will rise by 3.9% due to the commissioning of several new projects and the expansion of existing mines. Major projects like Teck’s QBII mine in Chile and Anglo’s Quellaveco project in Peru are likely to be commissioned which could add 200,000 mt. Ivanhoe’s mine in Democratic Republic of] Congo could add a further 70,000 mt. Additionally the ramp up at Freeport’s Grasberg [in Indonesia could potentially add a further 110,000 mt.

In addition to primary copper production, an increase in secondary production, from scrap copper, is also likely to contribute to copper’s surplus,

Stocks in LME warehouses are only slightly above a 16-year low, and those in ShFE (Shanghai) warehouses are as low as they were last in 2009.

With supply prospects looking optimistic, many are calling for lower prices heading into 2022. ED&F’s December copper price ranged between $9,315-$9,880/mt. The London Metal Exchange three-month spot copper price was trading at $9,588/mt ($4.35/lb), against the closing price of $9,505/mt on Dec. 6. The LME 3M spot copper price hit a record high of $10,747.50/mt on May 10 this year.

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