The global copper market may be about to experience a 2019 shortfall of up to 400,000 tons, or 1.7% of 2017 consumption, according to Yevgeny Bragin, deputy CEO of Ural Mining Metallurgical Company (UMMC). In a presentation titled ‘Long-Term Copper Demand Dynamics’ he forecasts copper consumption growth by 415,000 tons annually over the next five years, with a total increase by 2.5 mln tons by 2022.

According to Bragin, this growth will come mainly from the construction sector (+15.3 percent from 2017 to 2022), power industry (+38.1 percent, mostly in the renewable segment), and automobile manufacturing (+28.79 percent, primarily in the e-transport segment).

He says a deficit will emerge due to consumption growth in conjunction with a reduction in development of new production. “Following the 2008 crisis and the 2015 metal prices collapse, copper producers were afraid to invest in geological exploration, and operated at old deposits poor in copper. There are enough copper deposits in the world, but not enough stimulus to develop new resources”, he said.

Another Vedomosti interviewee believes that a new investment cycle will start once prices go up to USD $11,000 per ton (versus USD $6,563 now) and the global deficit reaches about 1 mln tons. At that point, it will be profitable for companies to invest in new deposits and process ore with lower copper concentration.

The Russian Copper Company supports this view. At present, copper concentration in various types of ore ranges from 0.3 to 5 percent, and gradually decreases, while for projected deposits this figure is only 0.81 percent. This means producers have to ensure the ongoing development of their deposits and use often expensive cutting-edge technologies to meet the rising copper demand, the company wrote on its website. It mentions the main copper consumers are high-tech industries.

Norilsk Nickel, Russia’s number one copper producer, plans to increase copper production by 3-8 percent to 400,000-420,000 tons over 2018-2020. The company’s marketing director Anton Berlin forecasts a copper deficit to emerge earlier, in 2018, of 100,000 tons. He also expects 2-percent production growth in 2018 with global copper mining output rising to 25.9 mln tons by 2025. The main drivers behind these forecasts include electric cars, with hybrid and electric vehicles production requiring 25-31 percent more copper than production of gasoline or diesel cars.

The copper deficit will spur price growth and consequently production growth. As a result, according to ACRA analyst Maxim Khudalov, the market will see a recovery in both copper mining and copper production from scrap.

 

Major global copper production, and anticipated demand shortfall.