Sector development

The fundamental situation on the copper market offers analysts good reason to assume that a high copper price level can also be expected for 2019. According to a survey of market experts carried out by Thomson Reuters, the average copper price in 2019 should be at a level of US US$ nbsp;6,699/t.

Much will again depend on the developments in copper smelters’ production. China is still the central focus. According to the news service CRU, 2019 will see further ramp-ups of smelter projects in China, though some of them will replace older smelting capacities. CRU reports that the expansion of smelter capacities in China will level off in the coming years. Stricter environmental conditions in China are making it more difficult to implement planned smelter projects as well. It should also be noted that the ramp-up phase generally takes a long time before full capacity utilization is achieved.

The International Copper Study Group (ICSG) anticipates a further increase of 2.7 % in the global output of refined copper for 2019 (2018: 2.7 %). The ICSG attributes this in part to a restart of production, which had been temporarily halted in some cases. Shutdowns on the smelter side – especially in Asia – had a reverse effect.

Good demand for refined copper can be expected for 2019, as the metal is an essential material for economic development in key sectors such as the electrical and automotive industries and construction. Solid economic growth in countries with the strongest demand, among them China, the US, and European countries, set the agenda in this respect.

China will account for about half of global copper demand in 2019 (2019e: 49.8 %). A majority of this demand comes from investments in infrastructure projects, among them energy grid projects requiring copper. The Chinese government’s “One Belt, One Road” program should be emphasized especially. In the development of the Chinese machinery and transport sector, there is also growth potential for copper applications. The ICSG expects China’s copper demand to increase by around 3 % in 2019.

According to the ICSG, the global market for refined copper is expected to have a slight production deficit overall in 2019. This should amount to 65,000 t and, against the backdrop of a 24-million-ton market, amounts to a largely balanced situation. As in the past, unforeseen developments can lead to major changes. From today’s perspective, however, the expectation of a slight production deficit appears to be justified in light of foreseeable developments on the production and demand side. Other market experts, such as the International Wrought Copper Council (the international industry association for copper and copper alloy products) and the research companies CRU International and Wood Mackenzie, also view the 2019 copper market as largely balanced or expect a slight production deficit.