Russia’s Nornickel sees the global copper market largely balanced and expanding incrementally, by 2%-3% this year and in 2024, and expects it to reach cumulative growth of 20% by 2035 as development of electric transport, electricity transmission grids and renewable power generation will push demand up to 30 million mt/year, from 24.8 million mt in 2022.
At present, and in the short term, demand growth looks to be constrained by a slowdown in the global economy, and the pace the copper production expands seems to suffice to meet the market immediate needs despite some risks of supply disruptions in South America.
In 2023 the global market is likely to be in a slight surplus of 173,000 mt, corresponding to less than 1% of demand, and tentatively, in a deficit of 54,000 mt or 0.2% of the market in 2024, Peter Varyushin, head of commodity markets research at Nornickel, told S&P Global Commodity Insights.
Copper demand in 2023 could increase by 2% year on year to 25.3 million mt against the backdrop of an expected acceleration in Chinese economic activity, and could grow by a further 3% in 2024 to 26 million mt, according to Nornickel. Mine and refined copper production this year will inch up 2% and 3%, respectively.
Nornickel forecasts global copper mine production in 2023 and 2024 at 22.3 million mt and 23 million mt, respectively, driven by an increase in output in South America and the Democratic Republic of Congo, while smelting and refining capacity expansions in China will boost the world’s refined copper supply: this is expected to reach 25.5 million mt this year and top 26 million mt in 2024.
China will provide 45% of supply in 2023: its refined copper production this year is expected to rise 8% year on year to 11.4 million mt. The country’s copper consumption will grow less significantly, by 5% to 14.33 million mt, but will represent a larger, almost 57%, share of the global total.
Expanding on the present and short-term outlook, Varyushin pointed to macroeconomic trends that will have a cooling effect on demand.
Firstly, global GDP growth, restrained by higher interest rates, is likely to come off to 3% this year, from 3.5% in 2022, and remain flat in 2024. Secondly, the markets are no longer being supported by the post-pandemic recovery, which has exhausted itself.
EU industrial production is trending lower, while there are also concerns arounds Chinese growth: August saw some positive dynamics, but the country’s still weak construction sector is hitting domestic demand, while exports are subdued due to the lack of growth elsewhere, Varyushin said.
India seems to be the main, if not the only, territory, where the PMI — an index of the prevailing trends in the manufacturing and service sectors — stays over the 50% threshold that indicates expansion, whereas developed countries’ PMIs sank below the 50% threshold in the second half 2022 and have since remained there.
Referring to the company’s longer-term outlook, Varyushin said increased use of the metal will be associated with the development of renewable energy sources and electrification of transportation. Consumption of battery and hybrid EVs and charging infrastructure could reach 4.7 million mt in 2030 and double to 5.5 million mt in 2035, from 2.7 million mt in 2022, he said, and the development of power transmission and distribution networks, which currently take only 100,000 mt/year of copper, would require 1.1 million mt and 1.8 million mt of it in 2030 and 2035, respectively.
Comparable leaps in demand and uptake volumes are expected from the renewable energy sector. Copper requirements from offshore and onshore wind farms will swell from 300,000-400,000 mt/year in 2022-23 to 1.1 million mt and 1.4 million mt in 2030 and 2035, according to Varyushin. Around the same time, intake of copper by photovoltaic installations will double to 1.7 million mt/year, up from 800,000 mt/year currently, he said.
By 2035, all the sectors mentioned above could be capable of generating additional 5.4 million mt/year of demand, S&P Global estimates from Nornickel’s data.
