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Copper Price Forecast and Market Predictions

We are holding to our view of higher copper prices by year-end. The market's mood has been sour since April because of worsening US-China trade relations and related softness in global manufacturing. Our market-balance calculations, however, show a market deficit in both 2019 and 2020. Inventory supports this fundamentally tight picture of the market — it reads low relative to consumption (even at the weak rates of growth now projected) and has been trending lower for the past two years.  This view of the market points prices higher and suggests a potential upside surprise should sentiment change. An added risk that has emerged in just the past month is the unrest in Chile, which may threaten production and exports in the world’s largest producer.

Our LME price forecast has prices averaging $5,875/metric ton in the fourth quarter, rising toward $6,400/metric ton in the first half of 2020. We therefore regard prices below $6,000 as a good buying opportunity. Although prices have moved lower than expected, we would seize on current prices to lock in forward buys.

Watch John Anton, Associate Director, Pricing & Purchasing, talk about the realities of the copper market production, inventory, and price.

On the downside, we now place an absolute bottom near $4,900 per metric ton, a cost floor that a global recession would expose should consumption actually contract.  To learn more, visit Commodity Coverage – Metals

Copper Supply and Demand Forecast Highlights

  • Mine capacity is projected to increase by less than 2.0% in 2019, with mine production growth even weaker; it is now projected to be essentially flat.  An added caution for the near term is mine production in Africa’s "Copper Belt." 
  • Global consumption in 2018 grew 2.6% December to December, copper's best performance since 2014. Data over the first six months of 2019, however, show a change in conditions, with year-over-year growth to June up only 1.0%.
  • The purchasing managers' index (PMI) new orders data for copper-consuming industries to September remain soft, with weakness seen in Europe. 
  • China remains the key to the outlook. Targeted stimulus has not offset the negative effects of the trade war to-date. Recent data, however, hints at an improvement. Any clarity on trade could release pent-up demand, trigger inventory restocking, and boost apparent consumption, quickly changing conditions in the market.
  • Long term, we project copper consumption growth to average 2.2%, more than half a percentage point lower than consumption has grown annually during the past 25 years.

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