Copper industry to return to pre-pandemic levels this year

27th May 2021

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

Font size: - +

The Covid-19-induced downturn in the copper industry is health related, and not economic like the 2008/9 global financial crisis, International Wrought Copper Council (IWCC) president Mark Loveitt said this week.

During a copper-focused conference, hosted by consultancy Roskill on May 26, Loveitt indicated that, while the cloud of Covid-19 has had financial implications on global economies and numerous industries, the copper industry is expected to return to pre-pandemic levels this year.

He explained that green issues have, during this time, “surged to the top” of the agenda, or their positions, as macroeconomic drivers have been reinforced.

Further, the unexpected rapid rebound in London Metals Exchange (LME) copper prices to above pre-Covid-19 levels, as well as the commodity’s large exposure to the rebounding Chinese economy and its links to the electric vehicle (EV) revolution across the world have aided in boosting expectations of a booming copper market this year.

With EV-exposed metals – like copper – more likely to experience a more sustained price cycle this year, the IWCC forecasts that global refined copper demand is expected to increase by 5% this year and by 3.4% in 2022 to more than 25.3-million tonnes.

Additionally, the dwindling availability of post-consumer resources, commonly referred to as “scrap”, which was also badly disrupted by a combination of the Covid-19 pandemic, lower prices and quotas, has further ensured that cathode sales have remained strong, thereby limiting the effect on refined producers, Loveitt said.

At the start of the pandemic, which characterised most of 2020, almost all end-use areas resulted in sharp falls in the demand for copper, though the production of laptops, tablets and smart phones (the use of which saw an increase during the pandemic) boosted demand for the metal.

In spite of some negative movements over the past few months, the IWCC expects record headline economic growth this year, though it warned that the supply-side constraints – or Covid-19 variants – may curtail the scope of the recovery, especially considering that Chinese growth has already slowed.

After outperforming gross domestic product (GDP) growth in 2020, metals demand is likely to relatively underperform in 2021, Loveitt warned, but he said that, given the size of underlying economic growth, “it should still rise strongly”.

He added that Covid-19 and subsequent policy responses have triggered an accelerated pace of change in the global economy, with diverging effects expected in demand for different critical raw materials over the course of the next decade.

Moreover, short-term supply bottlenecks are growing, and the industry is seeing increasing competition for resources and environmental, social and governance effects, though most critical raw material prices have risen to levels sufficient to incentivise new supply.

Overall, metals are considered to be more exposed to Chinese markets, in particular steel inputs, and are, therefore, more advanced in their economic cycle, commented Loveitt, adding that superalloys, on the other hand, are more sensitive to economic cycles given the high cost and lagging end-use markets.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION