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The Minister of Mining explained that trade tensions persist between the United States and China, creating uncertainty in the market and slowing the recovery of the metal price. The Minister of Mining, Baldo Prokurica, and the Director of Studies and Public Policies of the Chilean Copper Commission (Cochilco), Jorge Cantallopts, announced on Thursday the main conclusions of the Trends Report of the International Copper Market, corresponding to the fourth quarter of 2018, which contains the projections of the Institution on the price of copper, demand and supply of the metal for the years 2019 and 2020. The Secretary of State informed that Cochilco maintained the copper price projection of US $ 3.05 per pound for 2019, and US $ 3.08 per pound by 2020, given that trade tensions persist between the United States and China, generating uncertainty in the market and slowing the recovery of the price of the metal. The reduction of the expectations of global growth for 2019, added to the commercial conflict, moves investors away from the copper market, which would maintain the downward bias of the metal price in the short term. Although the situation facing the United Kingdom with the Brexit is not decisive for the price of the metal, it could increase the volatility of the financial markets and further reduce the exposure of investors to commodities, said the authority. He added that from the perspective of the copper supply and demand fundamentals, the scenario for the metal price is positive. For the years 2019 and 2020, Cochilco projects a deficit of 227 thousand tons and 185 thousand tons, respectively, which would represent 3.6 and 3 days of global consumption in each year, technically a market in equilibrium. In this regard, the Director of Studies and Public Policies pointed out that the copper deficits foreseen in this report are greater for 2019 and 2020, compared to the estimate in the previous forecast, due to the lower copper production projection of the Grasberg field in Freeport McMoRan, located in Indonesia. He added that for this period the entry of a relevant volume of new supply is not foreseen due to the absence of significant greenfield projects . In relation to the expectations of world copper demand for this year, Cantallopts said that it is expected to grow 2.4%, exceeding the growth rate of copper mine supply, which implies an additional demand of 575 thousand tons. In the specific case of China, he added, an increase in demand of 2.5% per year is estimated, which is equivalent to 307 thousand tons more than consumption in 2018. One of the important world economies that would register a high demand rate it is India given the strong economic growth experienced in the last five years which allows us to predict an expansion of 10%, also associated with the recovery of its foundry industry. Regarding the situation of global copper demand for 2020, Cantallopts said that this would slow to 1.7%, however there would be an additional demand of 419 thousand tons compared to 2019. He added that Chinas consumption growth would be lower, reaching 1.5%, rate close to long-term growth. In the rest of the world, growth would come mainly from India and the countries of Southeast Asia. On the prospects of the world copper offer, the Director of Studies and Public Policies indicated that it is estimated that it will reach 20.96 million tons in 2019, that is 1.6% more than the previous year; and to 21.46 million tons for 2020, which implies an increase of 1.9%. |
