SMM7 March 8: Benedikt Sobotka, CEO of Eurasian Resources Group (ERG), said that the copper sector is expected to have a long-term structural supply shortfall, and prices could exceed 7000 US dollars / tonne by 2021.
Copper prices broke through the $6100 / ton mark at the beginning of the year and reached $6300 / ton in mid-January. However, affected by the new crown epidemic, the price of copper plummeted to $4617.50 in March.
In the second quarter of this year, copper came out of a different market. Copper prices have risen over the past three months as Chinese demand has rebounded and overseas supplies have been disrupted, and are now trading at $6022.50 a tonne.
Despite a marked 33 per cent year-on-year decline in copper inventories, TC/RC for copper concentrate processing and processing has narrowed to its lowest level since 2013, and the CIF cathode copper premium in Shanghai hit a two-year high last month, Sobotka said.
The epidemic situation in the large copper-producing country led by Chile is grim. With the increase in the number of new crown virus infections, governments have taken strict blockade and containment measures. So far, 700000 tons of copper has been lost, according to ERG.
Trade data from the largest scrap exporter (US) showed that shipments of scrap copper shrank by more than 50 per cent in April from a year earlier, indicating that the supply of scrap copper has been severely damaged. Copper scrap accounts for about 1/3 of the total copper consumption.
Sobotka also said that looking ahead, the impact of the epidemic on supply will continue.
On copper demand, the chief executive of ERG said the pace of recovery had exceeded his expectations, especially in China, where data showed demand was not disrupted, but delayed.
He expects pent-up demand to drive a sharp recovery in the rest of the world in the second half of 2020. In addition, unprecedented stimulus measures around the world will sustain this recovery in the longer term, particularly in the copper-hungry green energy and digital economy sectors that many governments have chosen to invest in.
Over the next decade, the electric vehicle industry alone is expected to increase cumulative demand by 1.5 million tons.
Sobotka pointed out that renewable energy generation also requires large amounts of copper, and as countries seek to meet zero-carbon emissions commitments, renewable energy power generation is also increasing. Another area of growth that is often overlooked, he points out, is the new digital economy. China plans to invest $3.5 billion in digital infrastructure this year, which ERG expects to boost grid capacity demand.
He added that copper-plated surfaces could prove effective and boost demand as companies, governments and organizations look for ways to protect people from epidemics.
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