SHANGHAI, Oct 19 (SMM) – Copper prices continue to have upward potential in 2019, with LME copper price likely to trade at $5,800-7,600/mt and the SHFE contracts likely to trade at 47,000-58,000 yuan/mt, said SMM senior analyst Ye Jianhua. 

Speaking to delegates at the annual SMM Price Forecast Conference in Shanghai on Friday October 19, he said that threat of strikes at large mines is likely to reduce the growth of global copper ore supplies to 2.4% next year, from an expected 3.3% in 2018. Growth will stand at 500,000 mt in 2019, with First Quantum's Cobre Panama accounting for the majority at 150,000 mt, he added.

Production of copper cathode in China will gain 8.6% from 2018, to 9.5 million mt next year, when over 700,000 mt of copper smelting capacity commissions, Ye forecasted. The growth compared with an expected rise of 9.4% this year, bringing domestic copper cathode output to 8.75 million mt. 

As new, expanded smelting capacity is commissioned, higher demand for concentrate will weigh on treatment charges (TCs) and refining charges (RCs) in long-term contracts. Shorter supplies of ore are likely to exacerbate the situation, he believed. 

For scrap, Ye said that stricter environmental efforts drastically lowered copper scrap imports this year, eroding the price advantage of scrap over refined materials. However, the average grade of imports grew from 37% in 2017 to 56% this year. He expects tougher restrictions on scrap imports in the years ahead, which will further boost domestic consumption of refined materials. 

He said that copper consumption in China has begun a trend of slow growth, with a compound annual growth rate (CAGR) of 3.4% in 2018-2020.