Despite a decline over the Chinese Lunar New Year holidays, copper prices are predicted to continue to rise this year. Political upheaval around the world could lead to additional gains for the red metal, but there are also huge hazards, according to specialists. Chinese copper cathode production in January was 41,700 tonnes less than the forecasted 8.95 lakh tonnes output a decrease of 1.9% from December, according to Shanghai Metal Market. According to production schedules, this month’s output is anticipated to be 5.39% higher than last month at 8.99 lakh tonnes.
In 2023, we anticipate copper prices to continue high, averaging $8,500/tonne. Following Mainland China’s shift away from its zero-Covid strategy, copper prices had risen recently, according to Fitch Solutions Country Risk And Industry Research, a division of Fitch Group. Fitch Solutions stated that it was “optimistic about a revival of copper demand from Mainland China in the coming months” after prices increased to $9,430 on January 18 despite prices cooling. Currently, the price for cash delivery is $9,005.50, while the 3-month copper futures contract is trading at $8,892.50 per tonne. Prices for base metals are rising again after falling to $8,863 on February 7.
“China’s GDP is predicted to be 5% in 2023, according to Fitch Solutions, which might lead to strong demand for red metal and support for prices. In contrast, the supply of copper is under pressure, particularly as a result of political developments in Peru, where the Las Bambas mine stopped operating on February 1. The mine, which produces 2% of the metal globally, has been running at a reduced pace since December 7. First Quantum Minerals has stopped loading at the Cobre Panama port, according to ING Think, the financial and economic analysis division of Dutch multinational financial services company ING.
This is because the company and the government were unable to come to an agreement on tax payments. A faster-than-expected recovery in Chinese demand coupled with a decline in Latin American supply amid low stocks, according to Fitch Solutions, “may drive copper prices higher than our present prediction.” The disruption of mining activities in Latin America is expected to continue to pose a short-term threat to copper production. Increased government involvement in mining activities also casts doubt on the region’s output potential, according to Fitch Solutions.