Copper market: dynamics of changes
The copper market is an extremely important sector of the global economy. It clearly reflects all the fluctuations and problems in the world. Not surprisingly, prices for the metal were volatile in 2022, making investors nervous and thinking carefully about every move. However, analysts predict that 2023 will be more successful for the market, although the overall long-term outlook remains highly unreliable.
The year 2022 was a period of increased demand for copper, which resulted in metal shortages. However, while analysts estimate stable demand over the long term, supply shortages have had a short-lived impact. According to Wall Street, the price of copper will rise steadily in the future, which, in addition to demand, is supported by the active transition of companies to the use of green energy sources.
Analysts at Goldman Sachs believe that the main problem for the market in 2022 was expectations of lower demand, which was supposed to be a consequence of a slowdown in the global economy. However, the situation turned out to be the opposite, which caused an imbalance in the sector. At the same time, experts note that the market is still experiencing a shortage of supply, which is exacerbated by the decline in world stocks to their lowest point in 14 years. And if at the end of 2021, analysts talked about the possible surplus of the metal by 2023, now the world market has entered a new period with a deficit of 178 thousand tons.The trends in the copper market were also affected by the global processes of 2022. The energy crisis, geopolitical conflict, covid restrictions in China, and the increase in the Federal Reserve interest rate led to a sharp jump in prices for the metal, and they reached a maximum of 10,600 dollars per ton.
At the same time, analysts warn that in case Beijing lifts all restrictive measures, the country’s economy will again enter a phase of intensive recovery. In this case, the demand for copper will grow and the replenishment of raw materials will be practically suspended. If the ratio of stocks and consumption in China reaches the level of 2020, the demand for copper will increase by 500 thousand tons.
At the end of 2022 futures on the metal, calculated for three months, were sold on the exchange in London for $8543 per ton. At the same time, Goldman forecasts the average price of a ton of copper in 2023 in the range of $9750, and in 2024 – about 12 thousand dollars.
Analysts at Bank of America expect the metal will rise in price to $12,000 a ton in the second quarter. This is possible on the condition of easing of monetary policy on the part of the Federal Reserve. Experts believe that, despite the problems of global macroeconomics, sales of copper will steadily go up. Compensating for the decline in demand for metal in the real estate market will be an energy transition and the creation of the necessary infrastructure for it.