The global metals market is currently experiencing a tale of two commodities, with iron ore prices slumping while copper prices are soaring to heights not seen since the middle of 2022. Copper has seen a remarkable 10% increase so far this year, driven by supply risks and improving demand prospects for metals essential in the green energy transition.
The surge in copper prices can be attributed to unexpected tightening in global mine supply. Major players like First Quantum, Anglo American, Codelco, and Ivanhoe Mines have all reported significant cuts in production, leading to a reduction in the world’s annual supply of copper. Additionally, Chinese copper smelters have promised to reduce output in response to a dwindling copper ore market.
China’s strategic focus on copper as a key component in the green energy sector has contributed to the expansion of copper smelter capacities in the country. Last year, China’s production of refined copper increased by 13.5%, highlighting the nation’s growing demand for the metal.
The global refined copper market, initially expected to be balanced this year, is now forecasted to face a deficit due to the shortfall in mine supply. The extent of this deficit will hinge on the production curbs enforced by Chinese smelters and the pace of copper demand recovery in the second quarter.
Despite the challenges posed by the ongoing pandemic, there are hopes for a global economic rebound this year, with manufacturing activity showing signs of improvement worldwide. The positive outlook for a global recovery is providing further support for the surging copper prices, making it one of the hottest commodities in the market currently.
