With 2024 weeks away, the price of copper throughout the year has been a rollercoaster ride, with notable highs and lows and rapid changes.
Yet despite the ups and downs the price in December has had little change from what the market saw in January 2023.
According to Trading Economics, as of 12 December 2023, the copper price was sitting at US$3.79 per pound (/lbs) compared to US$3.72/lbs on 4 January 2023.
The wild ride started towards the end of January as copper suddenly spiked on 26 January, increasing nearly 50% at US$4.26/lbs — the highest recorded copper price for the year.
Yet due to a slower-than-expected demand recovery — as S&P Global reports — following the Lunar New Year holding and the US Federal Reserves ‘hawkish’ tone on interest rates, copper prices fell again and has not seen an increase like that throughout the remainder of 2023.
The rollercoaster started to dip at the end of May 2023 with copper’s price dropping to $3.52 — the lowest recorded price of 2023.
Financial services corporation ING (AMS:INGA) reports that prices had fallen throughout this year as global monetary tightening has weighed on developed economies.
Elevated rates and a strong currency have dragged industrial minerals during the last 2 years.
S&P Global says price movements have seemed to have more influence on demand than seasonality in 2023.
According to the International Copper Study Group (ICSG) low growth in mine capacity of around 1% per year was seen over 2017-2020 due to no major copper mine projects commissioned during the COVID-19 lockdown period.
Throughout the year, key projects have been delayed, operational issues affecting some of the larger mines in the world, along with the shutdown of First Quantum’s (TSX:FM) Cobre Panama copper mine, as previously reported.
Yet, ICSG reports in its Copper Market Forecast report for 2023/2024, world copper mine production is anticipated to increase by 1.9% in 2023, with growth of about 3.7% forecasted in 2024.
Found in deposits with lead, zinc, gold and silver, the metal is considered ancient, as archaeological evidence suggests the element was first put to use between 8,000 and 5,000 BC.
During this time copper could be fashioned into tools, ornaments, and weapons.
As humanity has evolved, copper is used in everything as the demand from green industries continues to grow. The critical mineral is used in all EVs — wind turbines, power grids, electrical wiring and electronic goods.
At this year’s Austmine Conference mining giant and one of the top copper global producers BHP (ASX:BHP) Chief Operating Officer Edgar Basto said: “The demand for copper is on the rise. The world will need more copper to accelerate the energy transition.
To take just one example, we estimate that electric vehicles — or EVs — could account for nearly 60% of global annual car sales by 2030 and nearly all sales by 2050. EVs use around 3 to 4 times more copper than petrol-based cars.”
S&P Global forecasted a high cathode supply in China, specifically during the December quarter.
Although the spot price has had dramatic changes throughout the year, but has remained relatively the same from January to December, according to Trading Economics, new data highlights that copper imports from the world’s top consumer – China, soared by 10.1% during December compared to November’s 550,600 tonnes.
This is the most imports copper has seen in almost 2 years.
This is not the last time we will see copper reach new heights, as the International Copper Study Group forecasts copper mine supply will grow 3.7% next year, with the Democratic Republic of the Congo in Central Africa to become the second largest copper producer, surpassing Peru.
Meanwhile, commodities agency Trafigura expects that copper prices could hit a new high in 2024. This will be fueled by a resurgence in the Chinese economy and supply issues.
ING says that copper prices will be supported by a weaker US dollar on the back of US Federal Reserve easing, and the Fed’s interest rate path will drive copper’s short-term price outlook.
The forecast of the copper price being on a less wild rollercoaster in 2024 is a hopeful and positive outlook to make. A weaker US dollar paired with a strong demand for copper, could in turn, drive the price higher.
Write to Aaliyah Rogan at Mining.com.au
Images: Kincora Copper