The rebound in Chinese demand in the first quarter boosted copper prices in a context where stocks of the red metal are falling.
China has not departed from tradition. After the Lunar New Year festivities, industrial activity rebounded in February and with it the demand for copper. March was marked by a slowdown, but if Chinese demand consolidates, known stocks of the red metal could melt by the third quarter. They fell at the start of the year to their lowest seasonal level since 2008, according to the experts invited to the commodities summit organized by the Financial Times in Lausanne, at the end of March. A fall which would have accelerated in recent weeks and which today leaves little room for maneuver in the event of unforeseen strong demand.
Decarbonation, the driver of tomorrow’s demand
As of the end of last week, the contract for a delivery of copper in three months was trading on the London Metal Exchange (LME) at over $9,000 a tonne, up 30% from its post-war tumble in Ukraine. Trafigura, the world’s largest copper trader, expects a rise that will continue beyond 10 000 dollars per ton, even up to 12 000 dollars. Goldmann Sachs even goes so far as to bet on 15 000 dollars per ton in 2025.
For the most alarmist, this price increase would not even reflect what is looming in the future, but just the current tension of the market. Demand should indeed be fueled by the boom in renewable energies. A trend that will consume copper to transport the electricity generated. Will we therefore move towards a request for 40 million in 2030 against 25 million tonnes in 2021, as predicted by Robert Friedland, founder of Ivanhoé Mines and discoverer of the Kamoa mine in the Democratic Republic of Congo?
Even if demand does not go as far as doubling, the question is when the deficit between supply and demand will begin, and how big it will be.
Production capacities in the DRC
Some mines can still increase their capacity, such as that of TFM in the Democratic Republic of Congo, but few are able to increase their production rate. It is also difficult to count on other short-term projects, due to the years needed to start up a new mine.
« The large potential deposit is that of recycling, explains one of the authors of the Cyclope report, a leading French review on the raw materials market, the next issue of which will be published in June. But it can only grow if prices continue to rise. A prospect that could also theoretically boost mining investments.
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