China's copper consumption is expected to be more prosperous in 2023 with the continuously optimized epidemic control measures, the release of favorable policies on real estate, the recovery consumption for downstream and end-users industries, and the increased copper demand in the new energy industry.
China's copper inventory is currently at a historically low level. China's copper social inventory is about 92,400 tonnes on December 8, which is at a low level over the years, while the bonded warehouse inventory is only about 20,000 tonnes, which was close to 150,000 tonnes in the same period last year.
The profits of copper smelting are considerable at present. The 90% quantile of smelting cost at the mine end is about USD 5,800/tonne, while the current copper price is about USD 8,400/tonne, so the production profit of copper mines is close to USD 2,600/tonne.
The power industry is the largest downstream of China's copper consumption and accounts for about 55%, wherein, the new energy power copper consumption accounts for the power industry's 20% - 30% which is rising rapidly in recent years and is expected to exceed 30% in the future, according to Mysteel.
On the other hand, the copper consumption of new energy vehicles increases faster than that of traditional vehicles. The demand for copper rods and copper foils for new energy vehicles has increased significantly. From the average value of passenger cars, the copper consumption of traditional fuel vehicles is about 23kg per unit, and that of pure electric new energy vehicles is about to 86kg per unit.
The global copper consumption for new energy is expected to increase by 0.7 million tonnes to reach 10% of total copper consumption this year, which was about 7% last year. The growth rates of new energy copper consumption in the transportation industry and the power industry are expected to reach 7% - 8% and 2% - 3% in the next few years.
Mysteel pointed out that the optimization of epidemic control, the slowing of interest rate hiking by the Federal Reserve, and the favorable policies of real estate will have a positive impact on the demand for copper. The growth rate of global copper supply will be greater than that of demand in 2023. However, once the optimization of epidemic prevention and control measures plays a significant role in economic recovery, copper prices may rise significantly. But considering the pattern of supply exceeding demand will exist for a long time, China's copper spot trading may be subject to long-term discounts.
Please refer to Mysteel's upcoming Copper Industry Chain Annual Report for more information.
Written by Edenlis Huang, firstname.lastname@example.org
Edited by Paula Xu, email@example.com