After reaching record levels in May, the metal, used in construction and green energy-related infrastructure, has retreated and then bounced around in a tight range. Three-month copper rose on Wednesday on the London Metal Exchange (LME) for the first time this week, climbing 0.7% to $9,505 per tonne.
Chinese demand for the metal has slowed down and traders are expecting the US Federal Reserve to start withdrawing stimulus. At the same time, the supply side has mostly recovered from the covid-19 impact on production.
While the agency predicts a supply deficit of 153,000 tonnes for 2021, it expects a surplus of 190,000 tonnes for 2022. This compares its previous forecast of a 70,000-tonne deficit and a 116,000-tonne surplus.
Click here for an interactive chart of copper prices
Limited supply, paired with expectations of the main copper consumers’ economic recovery, low inventories and labour disputes, are likely to push prices up, Cochilco said.
Global copper demand will reach 24 million tonnes this year, up 2.4% compared to 2020, and 24.7 million tonnes for 2022, a 3% increase.
Expected 2021 copper production in Chile, the world’s top copper-producing nation, remains around 5.8 million tonnes.