The fundamental situation on the copper market offers analysts good reason to assume that a high copper price level similar to 2019 can also be expected for 2020. According to a survey of market experts carried out by Thomson Reuters, the average copper price in 2020 should be at a level of US$ 6,030/t (October 2019).
Much will again depend on the developments in copper smelter production. China is still the central focus. According to the news service CRU, 2020 will see further ramp-ups of smelter projects in China, though some of them will replace older smelting capacities that can’t fulfill the rising environmental standards in China. These stricter standards and increasing financing barriers in China also make it more difficult to implement planned local smelter projects. The construction of smelters with a total capacity of over 100,000 t per year for 2020, which CRU expects, is significantly beneath the 2019 level. It should also be noted that the ramp-up phase generally takes a long time before full capacity utilization is achieved.
The International Copper Study Group (ICSG) anticipates a higher increase of 4.0 % in the global output of refined copper for 2020 (2019: 0.5 %). Among other factors, the organization attributes this to the fact that global output was restricted in 2019 due to various smelter shutdowns and points to the capacity expansions in China during the reporting year.
Good demand for refined copper can be expected again for 2020, as the metal is an essential material for economic development in key sectors such as the electrical and automotive industries and construction. Solid economic growth in countries with the strongest demand, among them China, the US, and European countries, sets the agenda in this respect.
China will account for about half of global copper demand in 2020 (50.6 %) (CRU). The majority of this demand will come from investments in infrastructure projects, among them energy grid projects requiring copper. The Chinese government’s Belt and Road Initiative (BRI) should be emphasized especially. In the development of the Chinese machinery and transport sector, there is also growth potential for copper applications. CRU expects China’s copper demand to increase by around 1.8 % in 2020.
According to the CRU, the global market for refined copper is expected to have a slight production surplus overall in 2020. This should amount to 95,000 t and, against the backdrop of a roughly 24-million-ton market, amounts to a largely balanced situation. As in the past, unforeseen developments can lead to major changes. From today’s perspective, however, the expectation of a balanced market appears to be justified in light of foreseeable developments on the production and demand side. Other market experts, such as the ICSG and the research company Wood Mackenzie, also view the 2020 copper market as largely balanced or expect a slight production surplus.