Recently, the price of copper rose to over 9,000 dollars per ton. Carsten Menke, Head of Next Generation Research at the Julius Baer Wealth Management Bank, talks about the recovery of the metal and says that “thanks to the lifting of China’s corona restrictions and hopes for economic recovery, copper prices have reached over $9,000 per ton. While mobility metrics such as subway traffic do show significant improvements, we do not believe this will necessarily translate into much higher copper consumption.
“In our view, the recovery is primarily due to factories in China remaining open almost all the time, with output of copper-containing products such as cars, air conditioners and other household products rising by more than 5% during 2022. However, against the backdrop of slowing sales, this has led to an increase in inventories , which may end in the coming months with the return of Chinese consumers to stores. This, especially for the important real estate market, which accounts for about a quarter of the demand for Chinese copper. We do not expect a strong recovery, as the focus of the measures introduced is more on stabilizing the struggling real estate developers than on stimulating property construction. Hence, we believe that the recovery in market sentiment will not lead to a recovery in demand to the same extent.
“Regarding copper mine activity, we expect 2023 to become the second year in a row of above-average mine supply growth, as projects and expansions postponed during the pandemic come to market. Coupled with the rather muted outlook for demand growth, not only in China but globally, we see a copper market Sufficiently supplied this year and believe that the last rally went too far too fast. Therefore, We recommend not chasing the rally, as we are convinced that better entry opportunities will arise throughout the year to benefit from the very compelling structural outlook of copper“.
About two weeks ago, the Ministry of Economy decided to block the market for importing copper cables from Turkey for another 5 years by continuing to impose a tax at a rate of 14.5%. This means that Israeli companies in the industry will benefit from continuing to maintain a higher price, since when a high tax is imposed – it is much less profitable to import from abroad.
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