MNI: Firm China Copper Demand To Support Prices
MNI (BEIJING) - Copper prices are expected to reach about CNY80,000 per tonne this year, up from January’s CNY72,000, as supply tightens and Chinese demand remains firm, local analysts told MNI.
Prices rose to CNY77,000 per tonne in February as smelters reduced treatment costs to near zero to keep operations running amid tight supply, Xiao Yufei, head of non-ferrous metals research at Nanhua Futures, told MNI.
“The decline in the U.S. dollar index and increased demand for gold has also lent support,” he added.
Prices will remain high this year as policy support boosts demand and supply remains tight, argued Gu Fengda, nonferrous metals chief analyst at Guoxin Futures, noting the market will gravitate towards CNY82,000 per tonne by December and trade above CNY90,000 during peaks throughout the year.
SUPPLY & DEMAND
Chile's state-run copper commission Cochilco, the largest producer in the world, expects supply this year to tighten by 3.4%, while China’s National Development and Reform Commission announced on Tuesday plans to increase domestic copper resources by 5-10% by 2027.
China’s demand is expected to grow at least 2% y/y in 2025 supported by growth in new energy vehicles, photovoltaics, wind power and other emerging industries, while traditional manufacturing consumption will remain limited, Gu noted.
“Each electric vehicle uses 80kg, with energy from photovoltaics and wind power five times as copper intensive as traditional fossil fuels,” he said. But an escalation in U.S. tariffs to 20-30% could also lower demand for copper as some customers reduce orders, Gu noted. (See MNI: China Targeting Negotiation, Removal Of All Levies)
Authorities are expected to invest CNY650 billion in copper-heavy power grid construction in 2025, up 6.7% y/y, noted Xiao.
“Authorities need more copper to maintain and renew power infrastructure as electricity demand is expected to grow strongly, with the secondary industry expecting a 5% y/y increase,” Xiao continued, adding real-estate consumption will remain sluggish as land acquisition, new starts and completions face pressure.
The bottoming of the solar industry this year will also boost demand, Xiao noted, pointing to the slight rebound of photovoltaic-module prices at the end of January – the first increase in nearly two years.