Mr. Hu Haibin, Chief Analyst of Jiangxi Copper Co., Ltd., and Ms. Meng Wenwen and Mr. Xiao Chuankang, Senior Copper Analysts of Shanghai Ganglian E-Commerce Holdings Co., Ltd., analyzed the copper market from different perspectives at the 2023 Mysteel Nonferrous Metals Annual Conference Copper Forum on November 30.
According to Mysteel's survey, it is expected that the output of mineral blister copper in China will increase by 9.9% year on year or 750,000 tonnes to 8.35 million tonnes in 2023, with an increase in growth rate. Since October 2023, Chinese copper concentrate spot TC has significantly decreased compared to the same period last year. The Mysteel copper concentrate spot TC index has fallen back to nearly $70/dmt as of December 12. Ms. Meng stated that the main reason is the recent frequent disruptions in overseas mining supply, as well as the recovery and continuous increase in output and new capacity of domestic smelters. Mr. Hu pointed out that the disturbance of copper mine supply has led to a narrowing of the global copper mine output increment by 300,000 to 700,000 tonnes in 2023. Ms. Meng predicted that the global copper concentrate supply will continue to show a relatively loose pattern in 2024, but its surplus will significantly narrow compared to 2023.
According to Mysteel's survey, the refined copper output in China is expected to increase by 711,100 tonnes or 6.59% month on month to 11.5012 million tonnes in 2023. The output for 2024 is expected to increase by 1.0263 million tonnes or 8.92% month on month to 12.5275 million tonnes. The increase in 2024 mainly comes from several smelters that underwent large-scale maintenance in 2023, as well as smelters that put new production capacity into operation in the fourth quarter of 2023.
Mr. Xiao pointed out that due to the continuous increase in domestic refined copper output, and the current exchange rate and overseas supply being unfavorable for import trade, some traders believe that the profit margin of imports may further narrow in the future.
Mr. Hu emphasized that the domestic consumption potential has been underestimated, and its actual growth rate is higher than the GDP growth target. The policy of guaranteeing the delivery of buildings will continue to support the real estate post-cycle industry until the entire year of 2024. In the long run, with the global carbon peak driving the new energy industry, it is expected that the annual growth rate of copper consumption in the new energy industry will reach 22% or 1 million tonnes in the next five years worldwide.
Mr. Xiao stated that considering the expected decline in imports, China's apparent copper consumption will increase by 5.66% or 680,000 to 730,000 tonnes in 2024. Domestic inventory is expected to remain low in the short term and will surge in the second half of 2024, mainly because the supply increment is higher than the demand increment in 2024. The supply will remain tight in the first half of the year mainly because of the specific arrangement of the raw material supply and production schedules of smelters. The shortage of supply will not only be reflected in refined copper, but may even occur in copper anode, scrap, and even semis industry. Therefore, big futures backs, high premiums, and even short squeeze may occur in the first quarter of 2024 in China.
Regarding the copper price in 2024, Mr. Hu expressed that whether China's stimulus policy will be active or passive, it is expected that the bottom of copper prices will appear in the first half of 2024. The potential risk factors will mainly come from domestic real estate, the Eurozone economic crisis, and the possibility of a large interest rate hike by the Bank of Japan. It is expected that as macroeconomic pressures gradually ease in 2024, consumption will show resilience, while copper prices will first decline and then rise.
Please follow the upcoming 2023 Mysteel Copper Industry Chain Annual Report and Mysteel Copper Concentrate Annual Report for more details.
Written by Edenlis Huang, huangting@mysteel.com
Edited by Paula Xu, xuzhongping@mysteel.com