Key Details on the Copper Market as Prices Reach Record Highs

LONDON (Reuters) – Copper prices reached all-time highs on Monday, driven by a rally spurred by short covering, which in turn attracted speculators and investment funds betting on further price increases for the metal.

Key Market Insights

Data from industry authorities highlight crucial aspects of the copper market.

Industrial Applications

Copper is essential in the power and construction sectors and is poised for increased demand due to the green energy transition, particularly from the electric vehicle market and emerging technologies such as AI data centers. Currently, equipment manufacturing ranks as the largest consumer of copper, followed by construction and infrastructure.

Global apparent consumption of refined copper rose from 10 million metric tons in the late 1980s to an estimated 26.5 million tons in 2023, with Asia accounting for 70% of this consumption. As of 2022, China emerged as the largest refined copper consumer, utilizing 14.7 million tons.

Production Overview

Copper deposits are found across the globe, and scrap copper contributes significantly to the annual global supply. The production process begins with mining copper-bearing ores, followed by the creation of copper concentrates that contain around 30% copper. The smelting process then converts these concentrates into matte, which consists of 50-70% copper, leading to blister copper with a 98.5-99.5% copper content. Finally, refined cathodes are produced, boasting a purity of 99.99% copper.

In 2023, global copper mine production reached 22.4 million tons, with Chile, Peru, and the Democratic Republic of Congo being the main producers. Including scrap, total refined copper production stood at 26.5 million tons, with China ranked as the largest producer.

Trade Dynamics

Copper trade globally encompasses various products within the processing chain, including concentrates, blister and anode forms, cathodes, ingots, scrap, and semi-fabricated goods. Major exporters of copper ores and concentrates include Chile, Peru, and Indonesia, while significant importers comprise China, Japan, and South Korea.

In the blister and anode copper market, Zambia, Chile, and the DRC are leading exporters, with China and India being the primary importers. For refined copper products, Chile, the DRC, and Russia export the most, while China, the U.S., and Italy rank as top importers.

Supply-Demand Forecast

In 2023, the refined copper market, estimated at 26.5 million tons, was balanced but is projected to face a surplus of 162,000 metric tons this year and 94,000 tons in 2025, as per industry forecasts. Refined production is expected to increase by 2.8% in 2024 and 2.2% in 2025.

However, actual copper supplies from mines have fallen short of expectations due to slower ramp-ups in various projects, delays in new ventures, and the closure of First Quantum’s significant Cobre Panama mine last December. This situation has reduced the availability of copper concentrate for smelters in China, leading to diminishing refining and treatment charges in the region.

Despite the tight supply of copper concentrate, current demand for copper in China appears weak, with inventories in warehouses monitored by the Shanghai Futures Exchange at near four-year highs and the premium for imported copper in China’s Yangshan area remaining at zero.