BMI, a market research firm owned by Fitch Solutions, has kept its average annual copper price prediction for this year at $8,800/t. The fact that this is more expensive than the average price for 2023 is due to supply constraints as well as a weakening the United States dollar.
BMI stated in a report on the state of the copper market overview that, despite its expectations for a slight improvement in prices this yea, a cap on prices will be imposed by the limited growth outlook across major markets and the weak demand from Mainland China, which will tip the risks to the downside.
Longer term, as the green transition quickens and the demand for “green” metals, like copper, rises, BMI anticipates a persistent deficit in the copper market.
Market Overview: Declining Trends and Supply Constraints
In 2023, prices averaged $8 523/t, which was less than the $8 788/t average in 2022. According to BMI, prices peaked on January 23 at $9 356/t due to expectations of a robust rebound in demand from Mainland China. Since then, prices have been steadily declining.
As of January 5, prices are essentially unchanged from the $8 832/t they reached on July 31 of last year. As a result of pressure from relatively high inventories and generally weak market fundamentals.
BMI predicts that this year’s copper prices will marginally increase from their current levels due to growing supply concerns and a declining US dollar.
BMI projects 3.1% annual growth in the world’s refined copper production this year, helped by China’s expansion capacity. Nonetheless, it anticipates that supply constraints in Panama will impede the growth of copper concentrate supply, creating a tight market and increasing pressure on refined copper supply in the upcoming months.
Long-term refined copper output is expect to grow at an average annual rate of 3.7%, from 27 million tonnes in 2023 to 36.3 million tonnes in 2032, according to BMI’s forecast.
BMI predicts that global copper consumption will increase by 3.5% annually to 28 million tonnes this year. Hampered by a lacklustre demand in Mainland China and a gloomy outlook for other significant markets.
The organisation does point out that this negative pressure will be somewhat mitigate by the shift to green energy. According to BMI, it expects robust demand growth over the remainder of the decade, driven by the auto and renewable energy sectors.
It projects an average annual growth of 3.9% in the demand for copper worldwide, rising from 27 million tonnes in 2023 to 38 million tonnes in 2032.