Global copper production is expected to be impacted by the Covid-19 pandemic, with data analytics and consulting company GlobalData now forecasting output growth of just 1.9% to 21-million tonnes for this year.
This compares with its previous forecast of 3.4% year-on-year growth in global copper production.
In an April 1 statement, it attributed the new forecast to falling demand and ongoing disruption to mining operations across the world as a result of lockdowns to try to stem the spread of Covid-19.
The ongoing disruptions would, however, be offset by production from the Cobre mine, in Panama, and the Grasberg mine, in Indonesia, GlobalData noted.
GlobalData senior mining analyst Vinneth Bajaj said production growth in China was forecast to be around 6%, down from the 9.6% forecasted before the outbreak of Covid-19.
Lockdowns in China and Peru would reduce the output in two markets that currently account for around 40% of global supply, while production in Chile was forecast to grow by 0.3% and in Peru by 2%.
New project development was also expected to slow, Bajaj said.
On the demand side, the construction sector, which was expected to be significantly impacted on by the Covid-19-related restrictions and lockdowns, accounts for 40% to 45% of global demand.
Bajaj added that GlobalData’s latest expectations were for global construction output to grow by just 0.5% this year, down from its previous forecast of 3.1%.
“The direct impact on construction has been the halting of work, with labour unable to get to the construction sites and the disruption to supply chains with delays in the delivery of key materials and equipment, owing to quarantines and travel restrictions,” Bajaj elaborated.
Widespread postponement and cancellations of projects are also expected.
As such, overall expectation for copper demand growth is 2.7% versus the 4.1% expected prior to the Covid-19 outbreak.
The lower growth rates were linked heavily to lower construction activity in China from mid-January, although the situation was gradually improving, with restrictions and lockdowns being eased, GlobaData said.
However, the company warned that there continued to be reduced activity globally as more countries moved to limit non-essential business operations.
Bajaj added that the current forecast assumed that the outbreak was contained across all major markets by the end of the second quarter, following which conditions would allow for a return to normalcy in terms of economic activity and freedom of movement in the second half of the year.
“However, there will be a lingering and potentially heavy impact on private investment due to the financial toll that is being inflicted upon businesses and investors across a range of sectors.”
After the prolonged trade war between the US and China, which undermined copper market sentiment in 2019, with prices down by 8% over 2018, the copper price improved during the fourth quarter of 2019, reaching $5 893.2/t owing to the optimism regarding the trade between these two countries.
However, prices initially fell steeply on the news of the spread of the virus between the middle of January and early February and, despite demonstrating resilience by reaching $5 694/t on March 4, with the outbreak of Covid-19 progressing globally, copper prices fell to $4 775/t on March 26.
With weak industrial and construction activity and shrinking demand, the copper price is expected to remain low, averaging between $4 900/t and $4 700/t for the coming three months.