Cochilco and Fastmarkets MB analyze the future of copper

Asia Copper Conference was the scenario in which the CEO of Fastmarkets MB conducted its research of the red metal assuring that, although the price of copper is being affected by geopolitical tensions, this is expected to be regularized by 2020. For his part, Jorge Cantallopts from Cochilco raised a favorable analysis regarding the production capacity of Chile.

The opening day of Asia Copper Conference organized by Fastmarkets MB and co-organized by Cesco and Minmetals started with an extensive analysis of the copper market by the CEO of Fastmarkets MB, Raju Daswani, within the framework of ASIA COPPER WEEK 2018.

Daswani said that, since January of this year, the price of copper fell by 15% according to the LME and there was a 14% drop in the basket of base metals prices for the period. “Clearly you can see a strong correlation between both groups of data, which tends to indicate that prices move in line by forces beyond the fundamentals of each of the metals. These forces are the macroeconomic and geopolitical conditions that are negatively impacting commodities, especially copper, for which the market fundamentals indicate that prices should probably be higher than those we see today”.

The executive added that macroeconomic and geopolitical conditions include the fear of China’s growth, due to the fiscal adjustment implemented by the government in early 2018, as well as the continuing turbulence triggered by trade tensions with the United States.

Looking at the indicators in real time, Daswani mentioned that there is a growing narrowness in the refined copper market from the second half of the year onwards. “While the copper deficit is not large, we expect it to imply a change in market sentiment and a rebound in the price of copper. By 2018 we expect the average LME copper price to reach 2.95 cents per pound and by 2019 it will reach 3.18 cents per pound … our basal prediction is that copper should have a good performance”, he said.

For his part, Jorge Cantallopts, Director of Research and Policy Planning from the Chilean Copper Commission (Cochilco) said that the prospective analysis is favorable regarding Chile’s production capacity in the medium term. “We believe that we will reach 6 million tons by 2020. The production of electro-refined cathodes, however, will reduce their participation in this figure by reaching 5% around 2030”, he said.

Among his conclusions, he also stated that “the smelting industry in the country faces great challenges and Chile is looking for a potential investor to face this challenge, probably not for an integrated smelter”. He also added that probably the price needed to trigger new investments should be above 3 to 3.2 cents per pound.