Copper has made a roaring start to 2023, defying most forecasts for an indifferent kick off and sluggish performance in the early new year.
The trigger is the China re-opening story, though why that is a big deal for copper is hard to see as the country’s appetite for the red metal hasn’t really slowed in the past year.
In the 11 months to November, China was again the biggest consumer and importer of the metal in various forms, with a record appetite for the red metal.
According to data from the General Administration of Customs, China imported 2.41 million tonnes of copper ore and its concentrate in November, hitting a new record high and a year-on-year increase of 10.26%.
According to the Chinese customs data, China also imported 358,300 tonnes of copper cathode in November, up 44% on the month and 10% for the year. Cathode imports totalled 3.32 million tonnes from January to November, up 9.36% year on year.
That is not a sign of a market that’s ‘closed’ and needs re-opening to drive extra demand.
But the facts have never stopped traders, investors and others in any market from punting on thin air and so it is in copper – the Comex price for metal delivered this month jumped back above $US4 a pound for the first time in quite a while – in fact, since June 21 last year.
The Comex price jumped 11 US cents a pound to $US4.01 for the third daily rise in a row. That has seen copper up 27.90 cents or 7.46% over the last three sessions (and up 5.6% since the start of 2023), but it still down 7.5% from the same time in 2022.
The price is also off 18.47% from its 52-week high of $US4.929 hit on March 4 last year but it is up more than 25% from the year low of $US3.2105 on July 14.
The strong start does undermine some gloomy forecasts for copper this year.
In late December, FocusEconomics, a Barcelona-based research company, said it saw demand for copper and industrial metals staying fairly weak during the first half of the “as global interest rates peak and China’s economy likely stays weighed down by the property crash and covid-19.”
The consensus forecast for average copper prices in 2023 is below current levels at around $US7,660 per tonne, according to FocusEconomics with the lowest prediction at just $US5,430 per tonne and the top end at an uninspiring $US8,775 per tonne.
In 2024 prices are expected to average $US8,000 per tonne – with the most bearish prediction pegged at below $5,000 and the highest at $10,750 per tonne.
At Monday’s close on Comex, the price was equal to $US8,980 a tonne.
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Chile’s Codelco, the world’s largest copper producer, will launch an austerity plan intended to boost its earnings in the short- and medium-term and optimise production and investments through 2027, the company said on Friday.
The state-owned miner cut its 2022/23 production goal in October amid lower prices and poorer ore grades, and indicated its lower output levels would continue for a few years.
The company estimated a 2022 copper output of between 1.435 million and 1.465 million tonnes, below its previous forecast of between 1.49 million and 1.51 million tonnes.
In a statement Friday, Codelco said its Chief Executive Andre Sougarret had ordered the immediate implementation of an austerity plan, cutting spending on materials, third-party services and events, among other things.
According to the statement, Sougarret asked top executives to, by the end of January, present a complete plan regarding production and investment between 2023 and 2027.
Codelco is currently implementing a multi-million-dollar investment plan to develop so-called “structural projects,” which it hopes will offset lower mineral grades at its deposits.
The company said it will continue to invest in structural projects as well as the renovation and maintenance of existing infrastructure, mining projects and environmental and community commitments.
The miner highlighted that the spending cuts should be carried out “without affecting labour safety standards.” Codelco has faced pressure to improve safety policies after two people died at its mines last July.
