SHANGHAI, Jul 17 (SMM) – Global copper mine production is expected to shrink 0.3% in 2020, as the COVID-19 pandemic takes its toll, said Jianhua Ye, chief copper analyst at SMM.

Jianhua Ye, chief copper analyst at SMM, spoke at the 15th China International Copper Industry Chain Conference/2nd China (Yingtan) Copper Industry Chain Summit in Shanghai on Friday July 17

Speaking to delegates and online participants at the 15th China International Copper Industry Chain Conference/2nd China (Yingtan) Copper Industry Chain Summit in Shanghai on Friday July 17, Ye projected a 450,000 mt Cu reduction in copper ore output directly caused by the pandemic.

The forecast of a 0.3% decline was adjusted from an earlier estimate of an increase of 2% made before the outbreak.

Chinese copper smelters, who are heavily reliant on imports in raw materials, have felt the pain from supply disruptions caused by the pandemic.

Treatment charges (TCs) for copper concentrate in China have been on a downtrend since mid-March when countries beyond China including top copper producers, put strict lockdown measures in place to contain the spread of the disease. Spot TCs have fallen below $50/mt, according to SMM assessment.

The pandemic has also affected supply of another raw material—copper scrap—to Chinese smelters. Data from China customs compiled by SMM showed a decline of nearly 300,000 mt Cu in China’s copper scrap imports in the first five months of the year, Ye noted.

He expected China’s copper cathode production to grow 1.8%, or 160,000 mt in 2020, compared to the estimate of 400,000 mt made at the end of last year. The production increased 2.4% to 8.94 million mt in 2019.

Apart from the unexpected pandemic crisis, global copper mine market has already been tightening on spiking smelting capacity. An SMM survey showed that more than 1.5 million mt of new copper smelting capacity is expected to come online in China during 2019 to 2021.

China’s copper consumption is forecast to grow 0.88% in 2020, faster than 0.6% in 2019, Ye added.

He expected Shanghai and London copper prices to peak at 56,500 yuan/mt and $6,200-6,800/mt, respectively, given the strong fundamentals and improved market sentiment amid global economic re-openings and stimulus measures.