Global markets are witnessing a very large and unprecedented price superscycle in all areas. This sharp rise in prices has not happened solely in the steel or oil and energy sectors. Most of the profitability in the current situation is focused on the mineral market. Copper prices have grown significantly in this direction and in line with other mineral products. In this memo, we will examine the latest situation of copper transactions and the growth of copper prices in international markets and the outlook for this red metal. Please stay with Artan Press until the end.
*** Analysis of copper trends in different factions of global markets
Copper trend analysis in terms of price has created different paths in the production chain of this mineral. The price of copper is at its historical record and naturally its producers are happy. But they must be divided into two groups. The first group of owners of copper mines such as Famli in Iran who export copper concentrate to China or convert it into a cathode and sell it for $ 10,500. In the current situation, this group has taken the main profit from the rising copper market.
The second group of companies without copper mines, which generally import their own copper concentrate, and due to the global supply deficit, see the reduction of their labor costs to the lowest historical level to convert the concentrate to cathode. It is practically impossible to claim that the price of copper will end in favor of all producers in this field. Continuation of this trend could lead to the closure of many copper concentrate processing companies.
*** Analysis of copper trends in terms of global production volume
The latest analysis of the International Copper Studies Group shows that global copper production from mines will increase during 2021 and 2022. Therefore, the analysis of the copper trend is still considered positive according to the described atmosphere. This analysis shows that global copper production after relative stability in the last 3 years, during 2021 and 2022 will be accompanied by a relative increase of 3.5 and 3.7 percent. Copper production was almost constant in 2020, and production decline in countries such as Chile, Indonesia and Peru has been offset by increased production in Russia, Panama and the Republic of the Congo.
*** Attracting international producers to refined copper
Global refined copper production will grow by 3% in 2021 and 2022, after growing by 1.6% in 2020. China’s refined copper production, which was hit hard by the corona crisis last year, will grow 4 percent this year and next. Global consumption of refined copper in 2020, thanks to a 38% increase in Chinese imports, increased by 2.5% compared to 2019.
In fact, rising Chinese consumption and imports have offset a sharp drop in consumption and demand in other parts of the world due to the Corona crisis. However, China’s refined copper imports are expected to decline in 2021. Forecasts show that the world’s consumption of refined copper in 2021 will reach less than 0.2 percent. Analyzing the copper trend in terms of production in 2022 will certainly be associated with challenges.
*** Resource constraints; The main factor in the current state of the global copper market
Research in the copper industry shows that global copper mines are not able to meet global demand. That is why refined copper is slowly opening its place in the market. Regarding the consumption statistics of refined copper, this figure will increase by 3% in 2022. It seems that the boom of economic activities in the world and the investment of different countries to use more clean energy, especially solar energy, will have a positive effect on copper demand.
It is predicted that the copper market will face a surplus of 80,000 tons in 2021, and this figure will be accompanied by a surplus of 110,000 tons in 2022.
The global copper market in 2020 faced a supply deficit of 600,000 tons. Analysis of global copper trends according to the conditions has shown will be a proof of supply strength in the coming years
*** Evaluate the trading pulse of the copper market
But it is not bad to have a look at the pulse of the copper trading market. This week, 15 major Chinese companies converting copper concentrate to cathodes agreed to reduce production by 8.8% or 1.26 million tonnes (equivalent to 300,000 tonnes of cathodes) to reduce demand and improve their labor margin. And preferably use other raw materials such as scrap to produce the cathode. This will further reduce China’s copper production and stimulate the market in the future.
If China reduces its copper production, we will see a growth of at least 20% in world copper prices in the next six months. It seems that China will give the green light to this approach because it is under the magnifying glass of the international community in terms of environmental pressures. This staggering price growth will keep the analysis of copper trends in world markets positive until the end of the year.
*** Predicting the effective factors in the world copper prices
Regarding the copper market and its price forecast from the perspective of events and developments in Latin America, the evaluation of this sector must be done with considerable care. In this regard, it should be noted that the challenges of Chile, the world’s largest copper producer, are not over. The problem is bigger than the corona and the labor crisis in the country, due to a shortage of sulfuric acid, which will soon reduce the country’s copper production by up to 12% and will make the global copper price more inflamed.
This will definitely greatly affect the copper trend analysis. If this scenario continues, the above 20% assumption could increase copper prices by up to 70% in the next six months. Copper market participants should be aware that the price of copper is not like steel with a price margin of about $ 60 in the international market. Price Copper has acceptable convergence in Iran and other countries. If the global copper price rises, we will definitely see a lot of inflammation in the domestic market.
*** The role of production chain constraints in the analysis of global copper prices
The current world copper price goes back to the problem of the world’s largest copper producer. In Chile, sulfuric acid is produced by refineries that are currently semi-active due to the corona, and the production of a large number of copper units in the country by electrovining, of which sulfuric acid is the raw material, is declining. An assessment of the vaccination process in this country shows that the country has a long way to go to experience the normal days before Corona.
Therefore, the analysis of the copper trend in this country will definitely worsen over time. We are currently witnessing very high levels of sulfuric acid supply in this country. Sulfuric acid prices have risen from $ 60 / tonne to $ 170 / tonne and are likely to continue until the end of this year. Due to the sulfuric acid crisis in the world and the severe bruising of this substance, Asian countries have also kept the production of this substance for domestic consumption, and we are witnessing a sharp growth of this substance in the world markets.
*** Copper will replace oil
Some analysts have acknowledged that copper will replace oil in global trading and that the metal will be at the top of commodity trading prices. Rising iron ore prices could also cause prices in the mining sector to jump sharply. According to Goldman Sachs analytical network, Jeffrey Curry, the company’s director of commodity analysis, said in an interview with Bloomberg, that unlike the valuation of corporate stocks, which is based on the growth rate and discounts of companies’ future cash flows, commodity prices in the market The basis of the volume of supply and instantaneous demand is determined.
This could lead to an unimaginable climb in the copper rand analysis in the mining sector. All rising price factors are seen in the technical and fundamental analysis of copper, and the market has accepted this price increase.
*** The role of political and geographical issues in inflammation of global copper prices
We should not underestimate political and geographical issues in predicting trend analysis. On the demand side, with the move of industrialized countries towards the use of alternative energy and new technologies in the need to transfer and store electrical energy, copper as the most economically efficient metal in the industry as a strategic commodity. And in terms of similar value has turned crude oil in a booming economy.
On the supply side, over the past year and the unique circumstances that have arisen, most of the copper-producing companies have turned their attention to profit-making for shareholders, and no major investment has been made in increasing the production of these companies. Unlike crude oil, which has always had the capacity to produce loose oil in the face of increasing demand, this is never possible for copper production. Therefore, considering the current market climate and taking into account the main factors governing it, analysts have forecast copper prices to be around $ 13,000 per ton by the end of this year.
*** Global rising prices in America
But the price of copper is moving sharply towards new ceilings. Everywhere you look today, the tide of protectionist sentiment is flowing. Some of these price increases are related to goods that are booming as the global economy wakes up. Copper trend analysis is no exception. The price of wood is at its highest level thanks to the boom in house construction. Copper and steel prices have also reached record levels. Agricultural products are not exempt from this trend. Corn prices are at their highest level since 2012. The prices of clothing and consumer goods have followed the same procedure. At the same time, the shortage of computer chips is helping to boost car prices, and its impact on electronics and home appliances can soon be seen.
*** Demand shock in commodity markets
Is this a transient phenomenon emerging from an economic shock or a more stable trend reminiscent of the 1970s? The answer to this question will have many consequences for financial markets. If the Fed thinks there is a real problem with inflation, it could raise interest rates or reduce its bond purchases sooner than expected. But the Federal Reserve firmly believes that inflation is due to the reopening of the economy and will be temporary.
*** Decreasing the attractiveness of investing in the Mexican mining sector
Taxes are one of the main reasons for the decline in investment attractiveness in the Mexican mining sector. This is also one of the cost-effective factors in analyzing the copper trend. Mexico is the world’s largest producer of silver and one of the top producers of gold, copper and zinc in the world. The mining sector is one of the most important sources of income for Mexico, which also plays an important role in creating employment in the country by creating 379,000 direct jobs and about 2 million indirect jobs.
Metal prices continued to rise in international markets as many market participants worried that prices would improve in the coming days; Optimism for economic recovery with the distribution of the Covid vaccine, while increasing the volume of investment in green technologies, was one of the main drivers of price growth.
*** The role of the corona in the staggering growth of world copper prices
The demand for metals is expected to grow, while the supply of mineral copper remains limited due to the epidemic in South American countries, and the supply-demand gap is expected to widen. However, a number of refined copper producers in China plan to reduce their purchases of copper concentrate by about 8.8% this year compared to last year.
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