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Copper prices swing amid positive economic forecasts and Chinese smelting concerns

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By Colin Hay - 
Copper market mixed pricing messages China smelting forecast

Rumours of copper smelting issues continue to emanate out of China, leading to major mixed messaging on where the critical metals price is heading.

At the same time, copper bounced back overnight to pass US$9,000 per tonne on positive news—also from China.

Senior commodity strategist Daniel Hynes reported in his ANZ (ASX: ANZ)-backed daily Commodity Wrap, that strong economic data out of China had raised hopes of an increase in copper demand.

However, he also noted that the global copper concentrate market has tightened up significantly following some cutbacks to output from copper mines.

“This has led Chinese smelters, which produce over half the world’s refined copper, to consider output cuts after treatment charges fell close to zero.”

He also said commented on reports suggesting BHP (ASX: BHP) had recently sold a cargo of copper concentrate at treatment and refining charges of US$3/t to at least one Chinese smelter.

Fastmarkets says copper concentrate fall ‘unstoppable’

Meanwhile, Fastmarkets recently reported that the copper concentrates TC index out of Asia Pacific fell to a new all-time low of US$5.90/t, down from US$9.40/t the week before.

Fastmarkets’ calculation identified a decline of 93.4% since the 2023 peak of US$89.20/t reached on 4 August 2023.

Elsewhere, FXempire has released an “optimistic” forecast for copper, with its market reaching around US$4.06, a 1.08% rise.

FXempire says its technical stance for copper is bullish above US$6.25, with downward risks if this threshold is breached, influenced by upcoming economic indicators and market sentiment.

Mined copper on the up

The Australian Department of Industry, Science and Resources’ latest Resources and Energy Quarterly forecast global mined and refined copper production to grow by 2.4% and 2.0% respectively in 2024.

The growth is supported by a combination of starts of new greenfield projects, a rise in production capacity and increasing automation of certain production processes.

Global mined copper output grew by 3.8% to reach 22.4 million tonnes in 2023.

Among major producers, Peru and the Democratic Republic of Congo saw significant production growth in 2023 – up by 13% and 22% respectively – while Chile, the world’s largest producer, saw copper output fall by 1.5% due to a combination of operational issues.

Australian copper export earnings are forecast to reach $12.1 billion in 2023–24.

Higher export volumes and rising prices are expected to see real export earnings reach $16.8b in 2028–29.

The quarterly report said global copper consumption will grow by 1.3% in 2024 to reach 28.4Mt.