Zhao Yingxiang: Global copper supply and demand and outlook

On November 27, 2020, the "2021 China Nonferrous Metals Market Outlook " and My Nonferrous Metals Network Annual Conference "of the third Shanghai Commodity Week was held in Crowne Plaza St. Noah Shanghai.

This conference is hosted by Shanghai Ganglian e-Commerce Holdings Co.,Ltd.(my non-ferrous website), co-organized by China Non-ferrous Metals Industry Association Renewable Metals Branch, with special support from Yunnan Xiangyun Feilong Renewable Technology Co.,Ltd.The purpose is to review the operation situation of the nonferrous metal market in 2020, and make an all-round and multi-angle in-depth interpretation of the nonferrous metal market in 2021, so as to help the participants of the industrial chain to arrange 2021 in advance.

At this conference, Macquarie Group commodity strategy research Zhao Yingxiang gave a keynote speech entitled "Global copper supply and demand and outlook".

Zhao Yingxiang first showed the trend of copper prices this year, indicating that prices tend to be driven by events;Then I introduce the basic situation of copper mines. Affected by the epidemic, the loss rate of mines has risen to a multi-year high, and mine supply has decreased in many producing areas, led by Peru, Chile and the United States. Copper mine production reduction due to the epidemic accounts for a relatively high proportion compared to the total market, but it is not the most affected base metal.

Then introduced the mine supply situation and copper concentrate TC situation, explained the road mine supply recovery gradually, but still lower than the same period last year;The copper concentrate market is tightening and TC is down, but high copper prices may stimulate more future supply, mine supply growth will resume next year, and copper production will grow at a faster rate in the next few years, after which aging mine assets will contract.

Then Zhao Yingxiang introduced the ownership of copper mines in the world. The ownership of mine assets is fairly evenly distributed around the world. The ownership proportion of copper mines in China has increased due to the increase of overseas investment.But new projects are dominated by North America, where the biggest mines have barely changed in the past decade but are likely to change over the next decade, with the copper concentrate market expected to be tight this year and next before easing up.

The demand for refined copper and its distribution will fall this year, with China and India rising but other regions contracting. Europe and North America account for 25% of global refined copper consumption, and global refined copper demand will fall by 2.4% year-on-year this year, mainly due to the drag of Europe and North America.Refined copper production has been less affected by the outbreak, and smelter production globally has not been significantly affected.

Finally, Zhao yingxiang talked about the scrap copper market. Scrap copper accounts for 15% of the raw materials used in refined copper production. Developed markets produce more scrap copper, but China will produce the most in 2019.

Copper scrap is also used in copper production, and global direct copper consumption will rise slightly from this year's low, which may lead to more direct consumption.Mr Zhao concluded that the split in copper supply and consumption could lead to competition for mine investment, as copper is seen as a "future asset" and a small surplus is expected in the refined copper market next year.