Javier Aravena, Financial Leader at Antara Mining.

Wednesday, May 22, 2024 - The copper market has experienced significant fluctuations throughout 2024, showing a general upward trend driven by several structural and cyclical factors.

Tight supply has been an important driver of the increase in copper prices. Incidents at some sites and production reductions at other major mines have restricted the availability of the red metal.

In turn, demand for energy transition has been a significant driver, fueled by the growing need for copper in electrification and the transition to cleaner energy. This demand is particularly reflected in the automotive sector, with a marked increase in demand for electric vehicles.

In addition, high market volatility has been a constant, with prices ranging from USD $3.67 to over $5.12 per metric ton throughout the year, highlighting the market's sensitivity to rapid changes in supply and demand.

The reduction in Chinese smelter production, motivated by the drop in treatment and refining rates, has had a direct impact on the availability of refined copper. On the other hand, we have observed a decrease in open interest in the futures exchanges, suggesting an exit of speculators from the market, thus influencing prices.

Despite the recent correction in prices from historical highs, fundamentals indicate a possible stabilization and a higher price range compared to previous years. The projection proposes that prices could remain high due to robust demand and tight supply. An example of this is the 6.13% increase over the last month and reaching a 21.8pp growth so far this 2024.

Although there has been a slowdown in Chinese consumption, a recovery is expected towards the end of the year, which could support global copper prices.

Stakeholders in the copper industry, including investors, companies and policy planners, should prepare for a high and volatile price environment. Adapting to rapid changes in supply and demand markets will be crucial. In addition, continued vigilance on geopolitical and economic developments affecting global markets will be essential to successfully navigate this complex and critical market.

Note originated in Portal Minero