The global copper market is expected to see a deficit of about 325kt this year and a surplus of 155kt in 2023, the International Copper Study Group (ICSG) said earlier this week.

The ICSG noted that continued COVID-19 related restrictions and workforce absenteeism, operational and geotechnical issues, strikes, water restrictions in Chile, lower-than-expected head grades and community actions in Peru have constrained mine output at a number of operations this year.  Meanwhile, stocks have fallen sharply with China notably importing sizable quantities and Project Blue understands that inventories are also low. 

Next year, the expectation of surplus is widely held underpinned by new supply in South America.  Notably, Antofagasta said this week that it expects copper production to be between 670kt and 710kt in 2023 with the completion of its Los Pelambres desalination and concentrator plants in Chile.  Meanwhile, world refined copper production is forecast to rise by about 2.8% in 2022 and 3.3% in 2023, the ICSG said. 

This higher output is set against expectations for a challenging macroeconomic environment underpinned by the energy crisis, inflation and challenges in China related to its zero-COVID strategy and property crisis.   The ICSG estimates, however, estimates that world apparent refined copper usage is expected to increase by about 2.2% in 2022 and 1.4% in 2023, although this represents a downward revision to growth forecasts. 

Copper demand is set to soar as a result of the energy transition, prompting concerns about the future availability of supply.  While long-term concerns may prove justified, in the near term sluggish demand and ramp-ups in supply look set to result in a comfortably supplied market.