Analysts project that copper price will be over US $ 3 a pound in 2021

In a discussion organized by Editec and MINERÍA CHILENA, Minister Prokurica and sector specialists analyzed the behavior of the market in the face of the pandemic, together with the projections for the commodity in the short and medium term.

The effect that the pandemic has had on the copper industry, and the projections that exist regarding this commodity in the short and medium term, were the axes of the webinar “International Perspective: How is the copper market coming?”, Which was organized by Editec Empresas and MINERÍA CHILENA.

The activity -which was moderated by Pablo Bravo, general editor of Grupo Editorial Editec- began with the intervention of the Minister of Mining Baldo Prokurica, who recognized the MINERÍA CHILENA Magazine for its 40 years of existence and its contribution to the development of the sector

The authority highlighted the behavior of the mining sector during the pandemic and its role in reactivation. “Mining gives us good news,” said the Secretary of State, referring to the positive figures he has shown in recent months, such as the behavior of Imacec Minero, the rise in mining exports and the number of projects with approval environmental, compared to last year.

In addition, he commented that by 2030 it is projected that copper consumption linked to the manufacture of electric vehicles and the development of charging infrastructure will reach 3 million tons, representing 11.5% of total consumption. In the case of renewable energies, the demand related to said segment will be 1.3 million tons for the same period.

Pandemic effect

The event was focused on evaluating the factors that have affected the global supply and demand for copper, together with the future scenario that the metal will face, in which the current health crisis remains a relevant component.

In this regard, Jorge Cantallopts, Director of Studies and Public Policies of Cochilco, mentioned that demand was greatly affected when the spread of the virus began, although over time consumption has been recovering, and with it, the price of metal, being relevant the role that China has played.

In terms of supply, he estimated that the fall in copper production in Chile this year as a result of Covid-19 will be less than projected, this an amount less than 100,000 tons.

In addition, he commented that Chile has a large portfolio of copper projects that allow foreseeing that production could reach 7 million tons by the end of this decade and that mining policy is working to make these initiatives materialize, although he acknowledged that it is complex reach a production growth rate like the one recorded in the 1990s.

Boost demand

Gustavo Lagos, an academic at the Pontificia Universidad Católica de Chile, highlighted the relevance that the United States continues to have in the copper market, considering the stimulus plan of the North American country and the expectations around the mandate of Joe Biden. He mentions that another factor is the progress that the process of developing vaccines for Covid-19 presents in different countries, one of them being the United States with the two most advanced initiatives.

Meanwhile, Juan Carlos Guajardo, director of Plusmining, alluded to the strength of China and its post-pandemic economic reactivation, which is driving demand for copper. Along these lines, he highlighted the international role of the Asian giant, such as its domestic development plans, which entail a strong demand for commodities.

Linked to this point, Daniela Desormeaux, Director of Studies at Vantaz Group, explained that China has a very ambitious environmental agenda, in circumstances that its peak of emissions could be registered in 2030, before which the Asian country contemplates a series of measures aimed at achieve carbon neutrality by 2060, among which transport electrification and renewable energies play a relevant role, technologies that lead to higher copper consumption.

Future price

Another focus of the discussion was the price that the red metal could reach in the short and medium term.

This is how the academic Gustavo Lagos, estimated that its price would be around US $ 3 a pound next year, although he did not envision it reaching US $ 4. “This year we are going to close at US $ 2.7 or US $ 2.8. I think that only in 2022 we will be able to see a new offer; next year there is none, and the demand is looking good, despite the fact that there is a history that China would have bought 400,000 tonnes of copper for its strategic stock, which means that this will influence consumption next year. By 2021 world consumption is expected to rise by about 4%, which will recover what was lost this year, which was a similar figure, “he said.

Daniela Desormeaux estimated that the value will be between US $ 3 and US $ 3.2 per pound. “Since 2014, when we do not have averages above US $ 3, we were already used to walking in the field of US $ 2.7-2.8, and talking about an average of US $ 3.15-3.2 is something good for our economy, but with high volatility; We will probably still have episodes of copper prices below US $ 3, and here in the very short term, the main source of uncertainty is the issue of the vaccine, ”said the professional.

A similar projection was made by Juan Carlos Guajardo, who estimated a price of around US $ 3.3-3.4 for 2021.

However, Jorge Cantallopts was a little less optimistic than the rest of the panelists, because “basically we see a demand projection a little lower than the 4% predicted by Gustavo Lagos. We see it closer to 2.9%, which may reach 3%, and an expansion in supply, not because there is a new one, but because there is a recovery; we are not assuming new outages like the ones that occurred this year. Many are going to put the batteries to reach (production) goals that this year were not achieved ”.

To this he added the fact that “this year scrap metal fell significantly, hopefully it was 15% of the supply, and this has to do precisely with the conditions of restriction to mobility that existed in Europe, the main source of scrap”.

Source: Minería Chilena

Translated with Google Translator