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Copper market to tighten further — BMO

Copper concentrate market looks to tighten further this year, according to BMO. “With [Chile] now having one of the worst COVID-19 infection rates in the world and thousands of cases across the domestic mining industry, pressure from mining unions and politicians alike for mining companies to curtail operations is rising.

The construction of a number of key projects has already being suspended, while the risks of further curtailments to operating mines is rising, increasing the potential for medium-term disappointment in Chilean output levels in our view,” writes BMO Capital Markets head of commodities research Colin Hamilton.

Plus, with additional disruptions in Peru, Zambia and Mexico already making an impact, “the copper concentrate market looks set to tighten further as evidenced by falling TCRCs, while we now estimate the refined copper market in to be near balanced this year, with the risk of a deficit growing,” Hamilton says.

At the same time, demand is picking up. “Further evidence of the strength in Chinese copper demand came from SMM’s latest survey of wire and cable fabricators, which showed operating rates at 103.3%. This is another new record level … We see Chinese copper demand in Q2 as having risen ~4% y/y,” Hamilton points out.

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