Copper prices Have Been Increasing Recently; Trend Expected to Stay Inclining

Copper prices have risen recently due to a combination of factors impacting both supply and demand globally. Notably, production adjustments in China and growing requirements for green energy initiatives are key influences driving the copper prices up.

In response to decreasing treatment and refining charges, major Chinese copper smelters have strategically decided to limit capacity expansion. This includes rearranging maintenance schedules and delaying the start of new projects. Such measures have been taken to address the reduced profitability in processing copper concentrate, further tightening the market supply.

Adding to the supply concerns, the global copper market has faced unexpected disruptions. For instance, First Quantum’s mine in Panama has cut approximately 4 million tonnes from the annual global copper supply. This substantial reduction has significantly contributed to the tightening of global mine supply, sparking concerns over a potential deficit in the market.

The refined copper market, which was anticipated to be balanced this year, now faces a likely deficit due to these supply shortages. With global copper inventories at historically low levels, any increase in demand could lead to further depletion of stocks, thereby exerting upward pressure on copper prices.

However, the upward trajectory in copper prices may be countered by macroeconomic factors. Concerns about demand in China, particularly given the ongoing downturn in the construction sector and a sluggish property market, continue to cast shadows over the market. Additionally, uncertainties surrounding U.S. monetary policy and interest rates contribute to the market's volatility. Despite these challenges, there are signs of potential recovery in demand, especially with the anticipated rebound in China’s manufacturing sector.

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According to the article by Procurement Resource, copper prices are rising, driven by reduced supply from China and increased demand for green energy. Chinese smelters have curtailed expansion due to lower profits, tightening the market. Significant disruptions, like the closure of First Quantum’s mine in Panama, which cut 4 million tonnes from supply, are exacerbating this shortage. Despite potential boosts from China's manufacturing sector, broader economic uncertainties and volatility remain due to shifting factors.