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True to its reputation as an indicator of the economy, copper bears witness to the recession which is taking shape a little more every day, with prices falling.
The signal sent by Dr. Copper, as English speakers call him, is not good. With prices falling, copper provides further proof of the concern weighing on the markets. The copper market is evolving as it is used in all areas of industry, whether electronics, construction or even the automobile. However, two of the three engines of global growth, China and Europe, are in recession. In question, the energy crisis, coupled, for the Middle Empire, with a “zero Covid” policy established by the authorities.
However, China largely dominates copper refining activities, recalls Ifpen, a French research institute and as such has become the leading importer of this ore from South America. The slightest slowdown in Chinese industry, and therefore in purchases from China, inevitably has an impact on prices.
Expanding Mining
The erosion of demand is also fueled by the strength of the dollar, because as with all commodities priced in US currency, ore costs more to buyers using other currencies.
To the demand at half mast, we must add an offer that is not lacking. ” Contrary to popular belief, mining is expanding, and at the current rate, copper is heading for surplus years 2022 and 2023 “, explains the expert Didier Julienne, president of the company Commodities and Resources.
In the short term, the market remains bearish
Can the trend reverse quickly? ” The market is so scrambled it’s impossible to know where it’s going “, adds our interlocutor. The only certainty is that in the short term, the market is on a downward trend with prices remaining high, around 7,500 dollars per tonne. The rest will be guided by Chinese politics and the duration of the war in Ukraine. In the longer term, Ifpen recalls that the low-carbon transition, which consumes a lot of copper, will drive up demand.