BMI Research expects the global copper market to experience a persistent undersupply over the coming years, as global consumption growth, driven by China's power and infrastructure sectors and increasingly by rising electric vehicle (EV) production, continues to outpace supply growth.
“Global refined copper demand will increasingly outpace production as solid demand from China's power and infrastructure sectors and rising global EV production deepen the global deficit over the coming years.
“We forecast the global refined copper balance to register a deficit of 251 000 t in
2018, and remain undersupplied through 2023,” notes BMI.
Over the longer term, BMI expects the global copper deficit to gradually shrink and the market to be broadly balanced over 2024 to 2027, as strong prices incentivise producers to ramp up output and invest in new projects.
Further, globally, refined copper production growth will pick up over the coming decade as prices improve. “We forecast global output to climb from 23.4-million tonnes in 2018 to 29.9-million tonnes by 2027, averaging 2.7% yearly growth.
“This remains in line with the average yearly growth of 2.5% over the previous ten-year period,” says BMI.
BMI predicts India will emerge as a bright spot in global copper production growth, supported by government initiatives to increase metal output at low production costs. The research firm anticipates India’s refined copper production to increase from 925 000 t this year to 1.8-million tonnes by 2027.
Meanwhile, copper demand will increasingly benefit from the growing EV market and growing popularity of renewable energy sources. The conventional internal combustion engine used in motor vehicles typically contains about 20 kg of copper compared with the 80 kg used in an EV.
Additionally, both wind and solar power generation use greater copper per unit of electricity produced than nonrenewable energy sources.
BMI says Chile’s copper production will return to growth in 2018, following a 4% contraction in 2017, owing to strikes and operational disruptions. “We forecast the
country's output to increase from 5.4-million tonnes in 2018 to 6.6-million tonnes by 2027, averaging 2.3% yearly growth.”
China’s copper production growth will lag compared with previous years over the forecast period to 2027, as low copper ore grades render a number of mines unprofitable and as smelters turn to ore imports.
“We forecast China's copper production to increase from 1.8-million tonnes in 2018 to 2.2-million tonnes by 2027, registering an average yearly growth rate of 2.1%.”
This represents a significant slowdown from the average growth rate of 7.3% over the previous ten-year period. Chinese firms will continue to prioritise overseas copper investments in low-cost markets to secure ore supply.
Meanwhile, Peru will achieve steady production growth over the coming years, supported by a strong project pipeline, competitive operating costs and
rising copper prices.
“We forecast the country's copper output to increase from 2.5-million tonnes in 2018 to 3.8-million tonnes by 2027, averaging 4.7% yearly growth. Southern Copper will drive the country's production growth over the coming years, with a strong project pipeline,” BMI notes.
US copper production will return to modest growth this year as rising prices encourage project development, following a steep decline in 2017, on the back of declining ore grades.
“We forecast US copper production to climb higher over the coming decade, from 1.3-million tonnes in 2018 to 1.5-million tonnes by 2027, on the back of rising copper prices and a solid project pipeline,” the research firm states.
Meanwhile, the Democratic Republic of Congo’s (DRC’s) copper production will maintain solid growth over the coming years, supported by continued investment, high-grade reserves and improving copper prices.
“We forecast DRC's copper production to increase from one-million-tonnes in 2018 to 1.9-million tonnes by 2027,” BMI reported.