Copper Outlook for 2023: Uncertainty Lingers Despite Rebound

Introduction:

 Copper prices experienced a modest recovery of 5.5 percent from a six-month low, reaching $7,899 per tonne. However, skepticism surrounds the copper outlook for 2023. This article explores the recent market trends, expert opinions, and key factors influencing the copper market, highlighting both optimistic and cautious perspectives.

Copper Prices Fluctuate, Casting Doubt on 2023 Outlook: 

Copper Rebounds from Six-Month Low, but Uncertainty Remains

Copper witnessed a decline to a six-month low on May 24 before staging a recovery to $8,335 on the London Metal Exchange (LME) recently. Despite this rebound, market experts maintain a skeptical view of the copper outlook for 2023.

Expert Opinions on Copper Prices

 Goldman Sachs and Citibank Express Concerns

Goldman Sachs recently revised its copper price forecast to $8,698 from $9,750, citing a slowdown in manufacturing in western nations and the reflection of a global recession in copper prices. Additionally, Citibank anticipates copper prices to drop to $8,000 within the next three months. These downward revisions signal a cautious sentiment in the market.

Factors Influencing Copper Market Sentiment 

China metal information network Antaike predicts that copper prices may fall to $7,000 in the second half of 2023 due to subdued demand growth and rising recession risks. The lackluster recovery of Chinese demand continues to disappoint, and rising exchange inventories contribute to concerns over a tight copper market, according to ING Think.

Global Copper Market Balance

The International Copper Study Group (ICSG) reports a nearly balanced global copper market, with a marginal surplus of 2,000 tonnes in March. The ICSG estimates an apparent surplus of 332,000 tonnes in the first quarter of 2023, compared to a marginal surplus of 8,000 tonnes during the same period last year. Global mine and refined copper production increased by 2.2 percent and 7.5 percent year-on-year, respectively, while overall refined demand grew by 2.3 percent during the first quarter.

Pressure on Copper from Various Sources 

Copper faces pressure from multiple angles, including weak physical and speculative demand in mainland China and the alleviation of supply issues in key producing nations in Latin America. This has resulted in a significant rise in inventories, with LME copper inventories reaching an annual high of 96,400 tonnes on May 24, up from a year-to-date low of 34,400 tonnes on April 5, according to research agency BMI.

Long-Term Growth Potential for Copper 

Commodities trading giant Trafigura suggests that copper prices could reach record highs within 12 months, citing a rebound in the Chinese economy and supply shortages. Kostas Bintas, co-head of Trafigura’s metals and minerals division, envisions prices potentially exceeding $12,000, driven by the demand for copper to meet net-zero emissions targets by 2050. Additionally, BloombergNEF predicts a 53 percent increase in copper demand by 2040, surpassing mine supply growth of 16 percent.