Five copper price trends to watch in 2020
As we look to 2020, copper is faced with a finely balanced market. For now, positive investor sentiment around copper’s fundamentals is supporting higher prices, Metals and mining research and consultancy group Wood Mackenzie said in a research note Wednesday.
Stronger demand growth is underpinned by new semis capacity, while mine supply growth will be reliant on additions from both projects and existing mines.
Meanwhile, the recent approval of new copper scrap re-categorisation standards in China could yet determine the mix of copper raw material imports into the country and influence global scrap dynamics, said Wood Mackenzie.
These fundamental factors, in addition to the strong geopolitical headwinds across the global landscape, will no doubt lead to another year of volatile prices. In the absence of a major economic downturn, copper’s supportive fundamentals should keep price risk skewed to the upside, said the firm.
Eleni Joannides, Wood Mackenzie Principal Analyst, sees five key themes to watch in the global copper market in 2020.
- Copper prices – fundamentals vs sentiment
- Policies and politics that will drive copper demand
- The global scrap dynamics will shift – response to changes in Chinese scrap policies on imports
- Lower TC/RCs could push some smelters below breakeven
- Mine supply looks set to return to growth
“During 2019, copper prices were largely determined by US-China trade-related news rather than copper’s own fundamentals. It was not until the US-China Phase 1 trade deal was agreed in December that there was a shift in sentiment,” Joannides said.
“As we look to 2020, the risk is that wider factors will once again influence price. The geopolitical issues that have surfaced since the start of the year could derail the rally that emerged in December 2019. On the other hand, further progress in resolving trade disputes will likely encourage a faster than anticipated recovery in demand and underpin prices,” Joannides added.