Since 2021, especially after the Spring Festival, copper prices have risen sharply. According to data provided by the China Nonferrous Metals Industry Association, the average price of copper on the London Metal Exchange in February and March of 2021 was US$8,460/ton and US$8,439/ton, respectively, an increase of 6.14% and 5.78% from the previous month, and a year-on-year increase 48.79% and 47.96%.
Duan Shaofu, director of the Heavy Metals Department of the China Nonferrous Metals Industry Association, believes that the main reason for the sharp rise in copper prices is the economic recovery, the imbalance of supply and demand, and the impact of capital liquidity. First of all, the market has good expectations for the recovery of the global economy, which has driven the recovery of the copper consumer market. Secondly, from the perspective of supply and demand fundamentals, the recovery of copper mine production has been slow and cannot keep up with the increase in demand. According to copper data released by the World Bureau of Metal Statistics, global mine copper production in 2020 will be 20.79 million tons, which is the same as in 2019. Global refined copper production was 23.94 million tons, an increase of 2% over the same period last year, and global demand was 25.33 million tons, an increase of 6.1%. Finally, from the perspective of capital liquidity, the United States initiated quantitative easing monetary policy, and the dollar fell, pushing up the price of copper on the financial side.
Regarding the impact of rising copper prices on the copper industry, Duan Shaofu believes that, on the one hand, the sharp rise in copper prices and the increase in profits of copper mines may further stimulate the release of mine production capacity.
On the other hand, the increase in copper prices has led to a significant increase in the upstream and downstream costs of the copper industry chain except for mines. In particular, downstream companies such as copper smelting and copper processing are the first to bear the brunt. The sales profit margin of downstream companies has been greatly reduced, which has also brought a certain restraint on downstream copper consumption .
Stable market price is the goal that enterprises look forward to. Regarding the future trend of copper prices, senior expert He Xiaohui believes that copper prices are expected to be high and low prices during the year. The price of copper has risen too fast and too violently, breaking away from the support of fundamentals. It is expected that the price will gradually pull back to a relatively reasonable level in the second half of the year.
