The executive vice president of the Chilean Copper Commission, Joaquín Morales, pointed out that the better prospects for the price are mainly due to estimates of lower supply of the metal in the market.
The Minister of Mining, Aurora Williams, and the executive vice president of the Chilean Copper Commission (Cochilco), Joaquín Morales, announced yesterday Thursday the main conclusions of the 'Copper Market Trends Report', corresponding to the close of the first quarter of this year, which contains projections on the price, demand and supply of the metal for the years 2024 and 2025.
The Secretary of State pointed out that Cochilco raised the average copper price projection for 2024 to US$ 4.3 pounds compared to the previous report that noted a value of US$ 3.85 per pound. While by 2025, he added, an increase in the price of the red metal is also forecast, which would reach US$ 4.25 per pound.
"Today we can see a significant improvement in the projection of the price of copper, but beyond the daily value what is important are the trends. At the beginning of November 2023 the price of the metal stood at US$3.64 per pound and at in recent days it has been above US$4.5 per pound, registering a significant jump in six months.
The Secretary of State added that "an important fact for our economy is that a growth in the production of the red metal of 5% is expected, which will allow us to reach 5.5 million tons, this increase is greater than the is presenting copper mine production in the world. Cochilco has just returned from one of the most important meetings of the Intergovernmental Group of Experts on Climate Change (IGEC) and global growth rates are lower than the recovery that Chile is presenting, however. despite the fact that in previous years Chile decreased in relation to the world that was also growing, therefore, today we see this possibility of recovery in copper production and this allows us to project ourselves positively."
The executive vice president of Cochilco, Joaquín Morales, pointed out that the better prospects for the price of copper are mainly due to estimates of lower supply of the metal in the market, due to the stoppage of operations at a mine in Panama, the lower profile production from Anglo American fields in Peru and Chile; and the announcement by a group of Chinese foundries to reduce production.
He added that to this situation is added a demand for copper that remains robust since for developed economies it continues to be a critical and necessary element for the energy and technological transition.
"The fundamentals of the copper market, by themselves, are not sufficient to explain the accelerated growth in the price of the metal but it also has a strong speculative component, evidenced by the rise in purchase positions in the metal exchanges by investors in commodities, that is, they bet that the price would continue to increase in the coming months," he explained.
He added that if geopolitical and macroeconomic conditions do not evolve adversely during the years 2024-2025, and if expectations regarding the advancement of the energy and technological transition are met, the price of copper should maintain its upward bias.
Copper production and demand
In relation to global copper production, a volume of 22.5 million tons is expected for 2024, which represents an increase of 2.5% compared to the previous period, and 23.48 million tons for the year 2024. year 2025, this is an increase of 4.3%.
The main countries that will contribute new supply this year are Chile with a production of 5.5 million tons, which represents an increase of 5% compared to 2023, mainly due to the greater productive contribution of Quebrada Blanca II, with the country maintaining the leadership with a 25% share worldwide.
It will be followed by the Democratic Republic of the Congo, which would register a growth of 10.5% in 2024 and in 2025 it would exceed 3 million tons of fine produced, displacing Peru by a wide margin.
Regarding the year 2025, Chile will contribute 5.8 million tons, which represents an increase of 6% compared to the year 2024.
In relation to the demand for copper by 2024, it is estimated that it will reach 26.78 million tons, with a projected growth of 3.6% compared to 2023. In China the growth would be 2.5%, while for the rest of the world would be 5.1%.
Considering the behavior of copper supply and demand, a deficit market is estimated for the years 2024 and 2025, of 364,000 tons and 278,000 tons, respectively, which represents an upward bias for the price of the metal.
