Copper is ending 2023 with the most significant price increase among non-ferrous metals due to supply disruptions, the Financial Times reports.
Copper rose by 2.5% to $8.6 thousand per tonne this year. This is due to signs of improvement in China’s economy amid production problems in Latin America.
The closure of a copper mine in Panama and the forecast of a significant reduction in Anglo American’s production will lead to a decrease in global supplies by 750 thousand tons, or 3% of the global figure, in 2024, according to Bank of Montreal analysts. The world’s largest mining companies, Vale and Rio Tinto, also recently published production forecasts that did not meet the expectations of some analysts.
Earlier, traders assumed that due to increased supplies from copper mines in the Democratic Republic of Congo, Peru and Chile, supply would exceed demand next year, but now a balanced market is expected.
“Only two months ago, expectations for the copper market in 2024 were downright pessimistic,” said Colin Hamilton, Managing Director of Commodities Research at BMO. – “But now the expectations of a bad year for copper have disappeared.
“The Chinese economy is doing well, although everyone seems to be talking about it as if it is in a recession,” said Daniel Smith, a spokesman for London-based metals broker AMT.
Goldman Sachs predicts that in the next twelve months the copper price will reach $10 thousand per tonne amid an expected decline in supplies.
Overall, this year has been a challenging one for the base metals market, particularly due to one of the most aggressive interest rate hikes by the US Federal Reserve. Higher rates pushed up the US dollar (the dollar index has gained more than 3% since the beginning of the year), making commodities more expensive for importers. The higher cost of borrowing also led to a reduction in capital-intensive investments and higher financing costs for metal stockpiles, prompting producers to reduce inventories.
These bearish factors put downward pressure on aluminum, lead and zinc, making non-ferrous metals the worst performing commodity sector for the second year in a row, the article notes. The price of nickel fell by 45% to $16.75 thousand per tonne due to a sharp increase in supplies from Indonesia.
Of the six major industrial metals, except copper, only tin has risen in price this year due to the suspension of mining in Myanmar, the world’s third largest producer.
