Analysts forecast global copper demand to fall by 5.4% to 22.625 million tonnes this year. This is according to the International Wrought Copper Council. However, they also expect it to bounce back by 4.4% to 23.625 million tonnes next year.
This year showed a drop in supply-side too, which is also going to rebound strongly in 2021.
According to the International Copper Study Group (ICSG), the supply of copper totalled 20.46 million tonnes in 2019. This year, copper mine output should drop by 4.0% to 19.65 million tonnes. For the next year, analysts forecast the copper mine output growth at 6.7%. The refined copper output in 2019 was 23.47 million tonnes. Analysts forecast it to be at 22.91 million tonnes for 2020 and might be 24.30 million tonnes in 2021.
The ICSG warned that in the current period of uncertainty, forecasting is more complicated and somewhat unreliable. According to the group, the economic disruption and its influence on the copper industry have caused more considerable risk.
The US-China tensions have an unfavorable influence on copper
On Wednesday, protests in Hong Kong and revenge that Washington will take against China, one of the largest consumers of metals, shook prices of copper and other base metals.
On Tuesday, the United States President, Donald Trump, said that his country was working on a response and which they would announce this week.
Stock markets and oil prices were also down, countering optimism about the reopening of the world economy.
Ole Hansen, Saxo Bank Chief Commodity Strategy Officer, announced that this is a concern for industrial metals. He thinks that there is a risk that something may not work as planned with all of these reopens. Copper on the LME seemed to be trapped in a range of around $5,150 to $5,350 per ton.
Investors feared the possibility of further protests in Hong Kong over new security laws and threats of U.S. sanctions.
Robin Bhar, an independent metals consultant, said that the trade tensions had a bad influence on metals last year. If it happens again, it would only hurt people’s spirits more than it already had.
According to Kieran Clancy, Capital Economics analyst, China said last week that it would stimulate its economy through the construction of metal-intensive infrastructure. He stated it was the turning point on their fundamentals side. The market is right to set prices on more robust demand, Clancy said.