GFMS Metals Outlook 2018: Copper Market Surplus Could Further Widen

SEATTLE (Scrap Monster): The 2018 Global Base Metals Outlook Report published by Thomson Reuters GFMS predicts wider surplus for copper market in 2018. However, the jump in surplus will be modest and inadequate to dampen the spirits. The copper prices are expected to average at $6,700 per tonne in 2018, higher by 8.1% when compared with the previous year. It must be noted that the copper prices had registered 27% gain in 2017 to average at $6,200 per tonne. The market is likely to balance out during the year, predicted GFMS analysts.

The general uptrend in prices is likely to sustain, mainly on account of supply shortage due to Chinese scrap import restrictions, potential disruptions in world’s biggest mines due to labor related issues and slowdown in new mine capacity. Though complete ban on Category 7 material is set to commence only in 2019, the stricter impurity thresholds are expected to support copper prices. At the same time, consumption growth his expected to expand steadily.

According to the report, global copper mine production is likely to post a stronger year in 2018, after the slight dip witnessed in 2017.

ALSO READ: Refined Copper Market Surplus Declined Modestly in 2017

The pace of China’s demand growth is likely to witness modest slowdown during 2018. The power sector will continue to dominate the country’s total copper usage. The report predicts marginal decline in overall investment growth in the sector. The overall demand growth will be impacted badly by slow growth in China’s property sector. The total investments in railway construction sector are also likely to fall by nearly 9% year-on-year in 2018.

Elsewhere in the world, US demand is expected to pick up during this year. The demand growth will also be driven by bottoming out emerging economies such as Brazil. Russia may have a positive influence on demand, though limited. Meantime, demand growth rates in India are expected to pick up during 2018.

GFMS Report expects copper surplus to further widen in 2018 and 2019. The prices are likely to touch $7,500 per tonne by 2020.