MCX Copper Price Forecast: Growth is likely to be relatively slow due to muted global demand. Is the world copper market in deficit or surplus? This has been a multi-million dollar question agitating investors and market participants of this prized industrial metal for some time now, especially given the metal’s stellar price performance in recent months.
According to the latest demand-supply estimates released by the International Copper Study Group (ICSG), the refined copper market is expected to be in surplus to the extent of 79,000 tonnes this year. The surplus comes after a sizeable supply deficit of 604,000 tonnes seen last year.
The primary reason for the surplus is the muted global demand which is likely to grow rather slowly this year (by 0.2 per cent). It is well recognised that China is the mover and shaker of the world copper market, and this year the Asian major’s demand is forecast to decline by 4.5 per cent.
To be sure, China recorded double-digit growth in copper demand last year, especially after its economic activities resumed with the support of a stimulus package. However, imports exceeded the country’s actual demand. It is most likely that China may be using up the excess copper inventory stockpiled last year.
From a supply perspective, smart growth in mine production (3.5 per cent), and refined copper production (3.0 per cent) are projected by ICSG. Major projects are soon starting in Congo, Peru and Chile. Indeed, the supply surplus is likely to continue into 2022 as well (109,000 tonnes). In other words, supply growth is set to exceed the increase in demand.
Interestingly, many market participants have a different view. The assessment of ICSG contrasts with investors and researchers who believe the copper market is undersupplied and point to the recent rally in prices above the psychological $ 10,000 a tonne for the first time in ten years. The all time high of $ 10,190/t was seen last week. They also point to growing demand in the automobile sector driven by electric vehicles.
At the same time, there is a belief that the market fundamentals do not fully justify the current market rates of copper. So, in the months ahead, the price performance of the metal will depend on when the period of high demand would end. Add to this the new round of Covid-19 infections in South America and India, and the picture becomes somewhat clear.
Far from ignoring the ICSG forecast and getting carried away by the current euphoria, the market participants would be looking for signs of change in demand conditions. Developments in China’s power grid and EV production will be keenly tracked.
From being a net exporter, India became a net importer of copper three years ago. In 2019-20, India’s refined copper import was 152,000 tonnes while export was 39,000 tonnes, making the country a net importer of well over one lakh tonnes. The change in status is attributable to the closure of a 400,000 tonne a year plant in Tuticorin.
Copper Down As The Global Copper Market Should See A Surplus Of 79,000 Tonnes
Copper yesterday settled down by -0.24% at 762.65 as the global copper market should see a surplus of 79,000 tonnes this year and of 109,000 tonnes in 2022, the International Copper Study Group said. Top copper producer Chile saw the output of the red metal fall for the tenth consecutive month in March, official data showed, marking a modest but continual slide in production that began shortly after the COVID-19 pandemic struck the country.
MCX Copper Price Forecast:
Factory activity in top metals consumer China expanded at a slower-than-expected pace in April as supply and transport bottlenecks weighed on production and overseas demand lost momentum. Copper’s rally, driven by a combination of optimism about recovery prospects for the pandemic-hit global economy and supply concerns, is likely to stall in the second half of 2021 as China reins in stimulus spending.
Goldman Sachs (NYSE:GS) forecast copper would average $9,675 a tonne in 2021, $11,875 a tonne in 2022 and $12,000 a tonne in 2023. However, Yangshan copper premium fell to $43 a tonne, its lowest since April 2017, indicating weakening demand from top consumer China as prices have leapt 24% this year. The global world refined copper market showed a 28,000 tonnes surplus in January, compared with a 1,000 tonnes deficit in December, the International Copper Study Group (ICSG) said in its latest monthly bulletin.
Technically market is under fresh selling as the market has witnessed a gain in open interest by 3.48% to settled at 4226 while prices down -1.8 rupees, now Copper is getting support at 759.2 and below same could see a test of 755.7 levels, and resistance is now likely to be seen at 765.6, a move above could see prices testing 768.5.
MCX Copper Trading Tips for Today:
- MCX Copper trading range for the day is 757—777
- Copper prices dropped as the global copper market should see a surplus of 79,000 tonnes this year and of 109,000 tonnes in 2022.
- Top copper producer Chile saw the output of the red metal fall for the tenth consecutive month in March, marking a modest but continual slide in production.
- MCX Copper Price Forecast: Copper’s rally, driven by a combination of optimism about recovery prospects for the pandemic-hit global economy and supply concerns
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The primary reason for the surplus is the muted global demand which is likely to grow rather slowly this year (by 0.2 per cent). It is well recognised that China is the mover and shaker of the world copper market, and this year the Asian major’s demand is forecast to decline by 4.5 per cent.
To be sure, China recorded double-digit growth in copper demand last year, especially after its economic activities resumed with the support of a stimulus package. However, imports exceeded the country’s actual demand. It is most likely that China may be using up the excess copper inventory stockpiled last year.
From a supply perspective, smart growth in mine production (3.5 per cent), and refined copper production (3.0 per cent) are projected by ICSG. Major projects are soon starting in Congo, Peru and Chile. Indeed, the supply surplus is likely to continue into 2022 as well (109,000 tonnes). In other words, supply growth is set to exceed the increase in demand.
Interestingly, many market participants have a different view. The assessment of ICSG contrasts with investors and researchers who believe the copper market is undersupplied and point to the recent rally in prices above the psychological $ 10,000 a tonne for the first time in ten years. The all time high of $ 10,190/t was seen last week. They also point to growing demand in the automobile sector driven by electric vehicles.
India became a net importer of copper three years ago. In 2019-20, India’s refined copper import was 152,000 tonnes while export was 39,000 tonnes, making the country a net importer of well over one lakh tonnes. The change in status is attributable to the closure of a 400,000 tonne a year plant in Tuticorin.