The dip in the copper price is temporary and not the stuff of nightmares, says Copper 360 chief executive Jan Nelson.
The red metal has been trading at 15% lower than in January 2023, presently in the $8 300 per tonne range. But Nelson is not concerned and said that the copper market’s fundamentals remained very strong.
The price was still well above historical lows. Nelson said: “We’re looking at a copper price of $8 300 a tonne and people are panicking. It’s nowhere near the $2 000 or $3 000 a ton, which we experienced through the previous down dip in the cycle.” He noted that the long-term outlook for copper was positive, as the demand for copper was expected to grow in the coming years, much of it fuelled by renewable energy.
“Copper, which is coupled more to infrastructure development and the health of economies, has taken a little bit of a hit as we’ve seen some scares in the United States with the banking crisis and concomitant infrastructure development slowing down, some of the economic scares in Europe influenced by the war in Ukraine, and the recent Chinese economic slowdown,” he said.
Nelson expects copper to continue decoupling from traditional indicators as the green economy gains momentum. “The fundamentals of the market are strong,” he said. “The demand for copper is growing, and the supply is limited. I expect the copper price to rebound in the coming months.”
Bullish forecasts for the year remain, with Goldman Sachs’s $11 000 per tonne 12-month expectation intact, while on the bear side, analysts still do not see the red metal dipping below $8 000 a tonne on downgraded views.
“Between the bulls and the bears, it’s a range that we are mighty comfortable with,” said Nelson.
Recently the Zambian government reported that copper production had fallen by 10%, and it ushered in its lowest output numbers in 14 years. In April this year, the International Copper Study Group forecast a copper supply shortfall of 114 000 tonnes, which is only expected to level out next year. Meanwhile, it forecast that China’s use of refined copper would jump from a forecast growth of 1.2% in 2023 to more than double at 2.6% in 2024.
