Coppers rapid recovery in recent months is expected to pause, but it will pick up momentum after the Chinese New Year holiday as demand gradually overtakes supply leaving the market with a substantial deficit.
Benchmark copper on the London Metal Exchange trading around 8,000 a tonne, near eightyear highs, is up more than 80 since demand tanked in the first half of 2020 as coronavirus lockdowns floored industrial activity.
Reasons for the expected lull include scrap, which typically starts to emerge at high prices, and the risk of wider lockdowns undermining industrial activity in the first quarter.
However, most important is slowing copper demand growth in top consumer China where imports have levelled off ahead of the Lunar holiday in February when many factories close.
China imported record volumes of unwrought copper and copper products last year, but the December number fell for a third consecutive month to 512,332 tonnes.
There isnt going to be a lot of impetus from China to take the market forward until March, said Roskill Principal Consultant Jonathan Barnes, who reckons global demand amounted to 23.3 million tonnes last year.
Chinas share of the copper market at 55 is now even bigger than it was because its consumption rose last year and almost everywhere else declined.
Copper supplies are expected to rise this year as COVIDrelated problems come to an end, but with prices at elevated levels the potential for disruptions remains as mine workers seek higher…