Global Copper Market to Face Deficit Owing to Skyrocketing Demand

IndexBox has just published a new report: 'World - Copper - Market Analysis, Forecast, Size, Trends and Insights'. Here is a summary of the report's key findings.

In 2021, the copper price is expected to grow, driven by an increase in demand over supply. Heightened demand for copper is spurred on by a robust pace in construction and rapid development of the electric car industry in the Asia Pacific, the U.S. and the EU. At the same time, copper output still hasn't fully bounced back after the shock of Covid-19.

Key Trends and Insights

This year, the global copper market is forecasted to face a deficit, leading to higher prices in so much as the global mining decreased in 2020 and hasn't fully recovered to previous production levels. In early June 2021, the price for copper on the London Metal Exchange (LME) stood at $9,990 per ton, fluctuating near one of the highest points in the past decade. Demand for copper strengthened thanks to a construction boom and rapid development within the electric car industry in Asia, the U.S. and the EU.

In 2020 global output for copper dropped by 2% y-o-y as a result of mines shutting down while implementing quarantine measures. Throughout the same period, demand for the metal remained consistently high and global production of refined copper grew by 2% y-o-y.

The sharp increase in copper prices could potentially lead to consumers replacing it, when possible, with a cheaper aluminum analog. Aluminum components may become an alternative to copper in wind turbines, power cables and charging stations for electric cars, which could lead to a decline in copper consumption.

In the next decade, the global copper market is forecasted to reach 25 million tons thanks to the increased demand in the electric car industry from 400k tons of copper in 2020 to 3.2 million tons in 2030.

Copper Mining by Country

After two years of growth, production of copper decreased by -2.3% to 20M tonnes in 2020. The total output volume increased at an average annual rate of +2.3% from 2012 to 2020. In value terms, copper production dropped to $128.4B in 2020 estimated in export prices.

Chile (5.7M tonnes) remains the largest copper producing country worldwide, comprising approx. 28% of total volume. Moreover, copper production in Chile exceeded the figures recorded by the second-largest producer, Peru (2.2M tonnes), threefold. China (1.7M tonnes) ranked third in terms of total production with an 8.3% share.

In Chile, copper production remained relatively stable over the period from 2012-2020. In the other countries, the average annual rates were as follows: Peru (+6.8% per year) and China (+0.8% per year).

Global Copper Exports

In 2020, approx. 1.7M tonnes of copper were exported worldwide; picking up by 14% on the previous year. Overall, total exports indicated a buoyant expansion from 2012 to 2020: its volume increased at an average annual rate of +5.0% over the last eight years. In value terms, copper exports surged to $11B (IndexBox estimates) in 2020.

Zambia was the main exporting country with an export of around 675K tonnes, which recorded 40% of total exports. Chile (283K tonnes) held the second position in the ranking, distantly followed by Bulgaria (120K tonnes), Democratic Republic of the Congo (85K tonnes) and Belgium (76K tonnes). All these countries together held approx. 33% share of total exports. South Africa (63K tonnes), Namibia (61K tonnes), Spain (56K tonnes), Slovakia (55K tonnes), Pakistan (38K tonnes) and the Philippines (34K tonnes) followed a long way behind the leaders.

In value terms, Zambia ($4.2B) remains the largest copper supplier worldwide, comprising 38% of global exports. The second position in the ranking was occupied by Chile ($1.7B), with a 16% share of global exports. It was followed by Bulgaria, with a 9.5% share.

In 2020, the average copper export price amounted to $6,523 per tonne, rising by 3.1% against the previous year. Prices varied noticeably by the country of origin; the country with the highest price was Namibia ($10,093 per tonne), while Spain ($5,607 per tonne) was amongst the lowest.

Source: IndexBox Platform