Where's the copper market headed?

Chilean copper commission Cochilco forecast a global demand drop of 417,000t for this year and 537,000t for the next, due to changing consumption patterns and a fall in supply related to construction delays that were caused by the coronavirus pandemic.

During the COVIDMIN 2020 web conference, Jorge Cantallopts, Cochilco’s director of studies and public policies, said by year-end 27.5% of worldwide copper mining operations could be affected, with Peru, Chile, and Panama seeing the biggest impact.

“Around the world, companies have already implemented changes in their mining plans to reduce the risk of a production decrease in 2020, but they can’t remain the same for long periods,” he said.

If social distancing restrictions, including workforce reductions and movement restrictions continue, global demand could even fall by 759,000t.

Cochilco forecast a global copper demand increase of around 45Mt by 2050, with 60% of consumption boosted by climate change and sustainability policies related to rising air conditioner use, telecommunications improvements and an increasing number of electric vehicles. 

“It’s difficult to predict what will happen with copper demand in the coming years, but if we reach the 45Mt, supply will be insufficient.” 

Cantallopts said the use of scrap metal and recycling of raw materials would challenge the industry in the coming years as circular economy and traceability of products will change the supply valuation. Meanwhile, the uncertainty generated by the health crisis could cause postponements of investment decisions for early stage projects.

“The risk now is that investments could arrive too late,” he said. 

Photo credit: Chile's mining ministry