The 2020 Vision for Copper

Uncertainty and growth fears loom large for the red metal.

 

Looking back at 2019, copper prices were heavily impacted by concerns over ongoing trade negotiations and a global slowdown of manufacturing activities. These geopolitical and trade concerns contributed to uncertainty in the marketplace that kept overall pricing at bay. A strong supply side contribution from the mining industry also provided modest support that helped stabilize 2019 copper price indexes.

According to a recent Reuters poll of metals analysts, 2020 pricing and demand for copper is expected to be capped as weak economic growth is predicted to weigh on the market. The London Metals Exchange (LME) cash copper price is anticipated to average $6,050 a tonne in 2020. A median forecast of 29 industrial metals analysts shows a 3% increase from prices that we saw in Q4, 2019. This forecast is relatively more bearish when compared to a similar analyst poll conducted back in July 2019 and represents a 6% downgrade of the mid-year consensus from last summer.

When looking at the supply side of the equation, forecasts of a market deficit in 2020 have been upgraded by 12% to 191,000 tonnes. Seeing as commodities investors regard copper as a signpost of the global economy, analysts say that only severe shortages would lift the price amid a weak economic outlook. This helps add a bit of weight to the overall view that prices will remain reasonably flat throughout the 2020 calendar year.

 

A recent Reuters article featured comments from analyst Daniela Corsini, with Intesa Sanpaolo Bank in Milan, who stated, “Unfortunately, we expect that the macroeconomic environment will deteriorate further. We expect flat copper prices in 2020, but significant downside risks persist.”

Some CEOs in the copper mining industry maintain a more optimistic tone moving forward regarding the back half of the 2020. Mining execs point to an anticipated push for the red metal. These views are due in large to trends like the move toward electrification and eventual resolutions to global trade negotiations. As the world moves toward electric vehicles, new infrastructure investments, urbanization, and renewable power, mining industry insiders can muster some positive medium and long-term outlooks for copper.