More important will be the effect of any recession on demand in Europe and the U.S., particularly in construction and less so in electric vehicles. Wind turbine manufacturers, a very large per unit user of Cu have, in the U.S., the $3/4 Trillion in loans and tax credits that wind farm developers will suckle upon.
An in-depth look at the market from Reuters via Mining.com, April 19:
Column: China’s loss of import appetite damps copper’s bull fires
This week’s CESCO copper conference in Chile has not been short of bullish soundbites.
Copper is a core energy transition metal thanks to its unrivalled electrical conductivity but one that is going to struggle to fulfill its demand potential due to a lack of investment in more production
Producers need to invest at least $105 billion to build 6.5 million tonnes of new mine capacity by 2032, according to Simon Morris, Head of Base Metals at research house CRU.
Right now, many producers are struggling even to maintain output. Chile, the world’s largest producing nation, saw output fall by 5.3% last year, according to state researcher Cochilco.
Throw in chronically low London Metal Exchange (LME) stocks and it’s no surprise that bulls such as Goldman Sachs are calling for higher prices. The bank has a 12-month price target of $11,000 per tonne.
Yet the copper price itself seems distinctly unimpressed, LME three-month metal last trading at $8,900 per tonne, was still stuck in a sideways holding pattern.
The lack of bull price impetus is down to China, which sharply reduced its imports during the first quarter of the year.
Import slump
China imported 408,174 tonnes of copper in March, down by 19% year-on-year and the lowest monthly intake since October.First-quarter imports of 1.3 million tonnes were 13% off last year’s pace.
The preliminary customs report aggregates arrivals of refined metal, anode, alloy and semi-manufactured products.
China’s net imports of copper in refined form may have been even weaker than the headline figure suggests if the burst of export activity in the first two months of the year carried into March.
The world’s largest user exported almost 55,000 tonnes of refined copper over January and February, compared with 20,500 tonnes in the same period of 2022.
As a result net imports of refined metal fell by 13% to 490,000 tonnes over the first two months of the year, the lowest early-year outcome since 2017, and March’s preliminary report suggests they dropped again last month.
China reopening trade
China’s lack of copper import demand has disappointed a market that had high expectations of the country’s reopening after last year’s Covid curbs....
....MUCH MORE
Most active (May) futures 4.0345 -0.0425 (-1.04%) . Here's the last few months of prices from the COMEX, you can see the burst of enthusiasm on the announcement of the end of the Covid controls and then, meh:
