Copper prices are anticipated to decline for the remainder of the year after falling over 30% after reaching a new high on March 4, while supply issues are likely to prevent a dramatic decline. According to research firm Fitch Solutions Country Risk and Industry Research, a division of the Fitch Group, “persistent supply issues in Latin America will prevent prices from falling much further, and we expect copper to remain elevated by historical standards, averaging around $7,500/tonne over Q422 (fourth quarter).”
However, Chinese copper smelters are rumored to have raised the floor price for treatment charges for copper refining to $93/tonne in the fourth quarter compared to around $80/t for the current quarter, according to ING Think, the economic and financial analysis arm of Dutch multinational financial services firm ING. As a result of weaker market sentiment and declining demand (as a result of slower global development), Fitch Solutions announced it was decreasing its copper price forecast for 2022 from its previous projection of $9,470 to $8,800 a tonne. A little production surplus, according to the research firm, is expected in 2022, but when demand rises in 2023, the market will turn back toward a deficit. Fitch Solutions reduced its prior forecast of $9,580 for copper’s price in 2023 to $8,400.
Copper supply was impacted in the second quarter of this year, according to Jayanta Roy, Senior Vice President, and Group Head, Corporate Sector Ratings, ICRA, because of protracted demonstrations in significant Peruvian mines. As a result, he added, “We expect metal prices to remain rangebound in the coming quarters,” adding that heightened concerns about waning global demand will constrain upward movement in the short term.
Narinder Wadhwa, national president of the Commodity Participants Association of India (CPAI), stated that more than the recession itself, “It is the dread of the recession that reduces the sentiments and also the pricing of commodities. The fear is at an all-time high. According to him, this might cause demand and new investment to decline globally.” A rising dollar has also reduced demand for the material, which is traded worldwide.