The copper price rose on Wednesday, still buoyed by high Chinese imports.
China’s copper imports in November were up for a third straight month, customs data showed, hitting their highest since March.
March delivery contracts were exchanging hands for $4.38 a pound ($9,636 a tonne) by midday on the Comex market in New York, up 1.1% compared to Tuesday’s closing.
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However, copper is set to lose momentum as supply increases in the next months.
Market to be well supplied in 2022
The global refined copper market is expected to be in a significant surplus in 2022, according to the International Copper Study Group (ICSG).
As S&P Global Platts reported, ICSG expects a small deficit of 42,000 million tonnes in 2021, with 2022 supply forecast to exceed demand by 328,000 million tonnes.
The 2022 surplus is based on the assumption of a 3.9% increase in refined output, the biggest increase in eight years, with copper demand expected to see a 2.4% increase, ED&F Man Capital Markets analyst Edward Meir said in a note.
“Even though a rise in demand is anticipated, this will not be enough to absorb the increase in supply,” Commerzbank’s commodities analyst Daniel Briesemann said in a note.
CRU also expects a surplus over the next two years.
“They see the major projects coming online as Teck’s QBII mine in Chile and Anglo’s Quellaveco project in Peru which could add 200,000 million tonnes. Then you have Ivanhoe’s mine in Congo which could add a further 70,000 million tonnes. Also, you have the ramp up at Freeport’s Grasberg [in Indonesia] which could potentially add 110,000 mt,” Marex said.
According to Briesemann, an increase in secondary production, from scrap copper, is also likely to contribute to copper’s surplus.