At the 2024 (19th) SMM Copper Industry Conference and Copper Industry Expo - Copper Raw Materials and Consumption Development Forum, jointly organized by SMM and Shandong Humon Smelting Co., Ltd., SMM Copper Senior Analyst Wu Yifan shared the copper market against the background of shortage of copper raw material supply.
China copper concentrate supply
China's copper mines face challenges from production accidents, grade decline, output reduction, environmental protection policies and other factors. The resultant shutdowns at mines and other factors have caused China's copper concentrate output to continue to decline since 2022. From January to February 2024, China's copper concentrate output decreased by 24,900 tons in metal content.
China future copper concentrate supply growth
The increase in domestic copper concentrate output is limited and is mostly driven by expansion projects. There are very few super-large high-quality copper mining projects that can be developed and put into production in China. Currently, the only ones expected to be developed are CHALCO's Hongnipo Copper Mine in Liangshan Prefecture and Zijin Mining's Zhunuo Copper Mine in Tibet. The increase in domestic copper concentrate output has encountered a bottleneck, and the import volume of copper concentrate has increased, causing China's copper concentrate self-sufficiency rate to continue to decline.
Copper smelting capacity expanded rapidly in 3 years
The arithmetic average annual growth rate of China's copper smelting capacity is expected to be 10% from 2023 to 2025, surpassing the 5% smelting capacity growth rate from 2014 to 2022, and eventually forming a smelting capacity of 12.14 million tons. This will bring great challenges to the raw material procurement work of smelters.
The increase in global copper concentrate output mainly comes from expansion projects
In the future, the increase in global copper concentrate output will mainly come from expansion projects of existing copper mines. The number of new world-class copper mine projects is limited, and new projects are unlikely to drive an increase in copper concentrate output. It will be difficult to see large-scale copper mine projects available for development worldwide.
The increase in global copper smelting capacity mainly comes from new projects
In the next two years, Asia's copper smelting capacity will grow rapidly; the new smelting projects of various Chinese smelters are the main engine of the growth of the world's copper smelting capacity. In the future, China's smelting capacity will exceed the world's copper smelting capacity.
Copper concentrate supply and demand imbalance
The Cobre Panama copper mine in Central America stopped production for the whole year, Anglo American lowered its 2024 copper production target, drought in Zambia reduced hydropower by 85%, and the Brazilian Ministry of Environment closed Vale's mines. The degree of supply-side disruptions was greater than expected.
Copper concentrate and copper anode inventories gradually increase
Some copper smelters in China are about to enter a concentrated maintenance period in the second and third quarters. As the output of copper cathode is expected to decrease month by month, the inventory of copper concentrate and copper anode will increase. With the sharp rise in copper prices, the proportion of copper scrap flowing into the smelting industry is increasing.
Copper ore supply shortage leads to sharp drop in spot TCs
The production cuts and shutdowns on the overseas copper concentrate supply side have put pressure on Chinese smelters' raw material procurement. Copper concentrate sellers have reduced the proportion of long-term orders and increased the proportion of spot transactions. The spot TCs continued to fall and are now close to $0/mt.
Sanctions on Russian copper increase global copper cathode inventory pressure
Global copper cathode inventories continue to accumulate, but the absolute value is still relatively low. Once the Russian copper sanctions are implemented, LME copper cathode inventories will face greater pressure.
Copper cathode consumption recovered rapidly after the 2024 Chinese New Year holiday
According to SMM's monthly survey of China's major copper consumption sectors, downstream copper consumption quickly returned to normal levels after the Chinese New Year holiday.
Forecast for each segment in 2024
In 2024, copper cathode consumption will be mainly driven by new energy, photovoltaic and home appliance industries.
Copper prices hit record highs
The macro and fundamental factors has pushed copper prices to a new high since 2006.
