MNI: Copper Q4 Prices To Fall Despite Firm China Demand
MNI (BEIJING) - Copper prices will continue to fall to USD8,500-USD8,700 per tonne by year-end due to geopolitical risk and higher ore supply, and despite solid China demand driven by strong exports and consumer goods sales, local non-ferrous analysts told MNI.
LME copper prices, which have declined about 11% since the start of October to USD8882per tonne, will continue their downward trend, said Shanghai-based Wang Yingying, senior copper analyst at Galaxy Futures, highlighting geopolitical uncertainty following Donald Trump’s election and stronger-than-expected ore supply.
“Unexpected mine production activity has shifted the market outlook from scarcity to surplus,” she continued, pointing to a global refined copper excess of around 200,000 tonnes.
While China’s copper demand will remain firm in Q4, driven by strong exports and consumer goods sales, this will not be enough to offset the softer prices, she cautioned.
DEMAND FIRM
Chinese consumption growth will rebound in Q4 to 5.5% y/y from H1’s 1% gain as prices fall, Wang predicted, noting the government’s trade-in scheme for white goods and high levels of exports will support demand.
Air-conditioning units and new-energy vehicle sales were expected to grow by 30% in Q4, Wang continued, while grid investment – which softened over September and October due to high prices – will rise as prices decrease. The end of year recovery will drive overall 2024 consumption to 15.3 million tonnes, up 3.6% y/y, but at a slower pace to 2023’s 6.1% y/y growth, Wang said.
Strong 12.7% October export growth in U.S. dollar terms is likely to continue in the final two months of the year supporting copper usage, a Mysteel copper analyst told MNI.
COPPER OUTLOOK
Demand growth next year will remain resilient given strong overseas demand for infrastructure projects and the continued expansion of China’s new energy industry and artificial intelligence, the Mysteel analyst said.
However, recent measures to stimulate the property sector will have a limited impact on consumption, with the industry continuing its structural transition next year towards higher quality construction, the analyst added.
While Trump’s China trade policies posed a significant risk to demand, they were unlikely to be implemented in the short term, the analyst continued, noting the president-elect’s focus on fossil fuels may also slow world demand for copper-heavy renewable products. (See MNI INTERVIEW: China Stimulus To Hold Iron Ore Around USD100/t)
Strong demand from an expansion in the electricity network and energy storage capacity will also support appetite next year, Wang said, expecting total consumption to reach 3.4% y/y growth in 2025.