Overall economic development

The IMF estimates that the global economy will grow by 3.7 % in 2019. The forecast is just slightly below this year’s earlier estimates, and significantly higher than in the period from 2012 to 2016. The organization at the same time suggests that there are continued risks related to the uncertainty of political developments in particular. First and foremost, these include increasing protectionism, as well as trends moving away from multilateral trade relations based on fixed rules.

Newly industrialized and developing countries will once again record the strongest growth in 2019. The IMF forecasts a 4.7 % growth rate for this group of countries. The IMF attributes the decline in growth expectations compared to earlier forecasts to the negative influences of the trade conflicts between the US and China. Furthermore, the US has renewed sanctions against Turkey and Iran. The economic outlooks for larger Latin American economies such as Argentina and Brazil have also recently dampened. The upward trend in Asian countries may be slightly below the prior-year level in 2019, with 6.3 % growth. This trend includes China, which is important for the copper market.

In contrast, the outlook for developed countries is more subdued overall, which can be seen in a reduced growth forecast of 2.1 %. At 2.5 %, economic growth in the US in 2019 is predicted to be lower than the previous year, due in particular to ongoing trade conflicts and the gradually weakening effect of corporate tax breaks. In the euro zone, the IMF sees 2019 economic growth at prior-year level, forecasting 1.9 %. The IMF estimates that the German economy will grow by 1.9 % in 2019 accordingly. The concrete impact of Brexit continues to be a significant risk factor in the European Union.

Individual sectors such as the electro-technical industry, the automotive industry, and the construction sector are important consumers of copper products. The following economic developments expected here are as follows:

The German Electrical and Electronic Manufacturers’ Association, in its last forecast for the global electrical and electronic products market dating from mid-2018, confirmed its sector forecast of 5 % and 4 % growth for the years 2018 and 2019, respectively. This forecast was based on 53 countries, which together comprise approximately 97 % of the global market. Europe accounts for 16 % of the global market, and growth of 3 % is expected there for 2019. This growth rate also applies for Germany.

According to the European Automobile Manufacturers’ Association, demand for automobiles in the EU increased by 2.5 % in the first nine months of 2018, with more than 12 million new car registrations. In fall 2018, demand fell slightly, in the European automotive sector in particular. The switch to the new test procedure for cars, WLTP (Worldwide Harmonized Light Vehicles Test Procedure), has led to temporary risks for future growth in vehicle production. We consider this a transitional effect and expect a good demand and sales situation for fiscal year 2018/19. We also expect positive growth momentum from the intensifying discussion regarding electric vehicles.

According to the German construction industry, the economic situation in the sector developed better than expected in 2018. For the entire year 2018, a 6 % nominal revenue increase is anticipated in the main construction trades. The industry association expects an increase at the same level for 2019. Positive driving forces include the acute demand for additional housing and increasing local investments.

Based on these forecasts, we expect stable to good economic development in 2019 in the three most important sectors for copper applications. However, political and economic developments could strongly influence the respective market situation.

The influences from European and German energy and environmental policy are important for us but difficult to forecast in detail.