Copper Outlook

Copper market deficit to continue in 2022

Fastmarkets is forecasting copper prices to rise steadily to above US$10,000/t as it predicts a deficit will remain in 2022 despite expectations mined production will increase by 7% next year.
“Total world copper mine production growth could surge to 7% in 2022 from just 2% in 2021. Such strong growth will bring the global concentrate market back to balance in 2022 after two deep deficit years,” analysts said.
“However, we expect a higher rate of supply disruptions next year given so much new and expanded capacity due to come online or ramp up.
“We expect a bigger deficit of refined copper of 571,000 tonnes for 2021 as a whole, assuming 2.2% growth in refined output and 2.5% growth in refined usage. We also expect the refined market to remain in a deficit in 2022.”
Copper prices soared to all time highs of around US$10,700/t in May as supply shocks hit and Goldman Sachs branded the commodity “the new oil” thanks to its role as a driving force behind the electrification of energy.
It pulled back before again rising to around all time highs in October as copper stores on the LME hit their lowest level since 1974. Despite the emergence of the Omicron coronavirus variant as a handbrake on growth, Fastmarkets remains bullish on the outlook for the red metal.
“Even though the Omicron variant constitutes a potential bearish risk to our overall copper outlook, we continue to think that the bull market is not over yet. The consolidation from May was necessary after prices rose too fast and too hard. Sentiment is now in check and positioning is clean.
“Consequently, we have a bullish price outlook for the rest of 2021 and going into 2022