Many scrapyards and consumers in China have reported an increase in their scrap stocks over the past month. Increased availability of copper scrap has also contributed to the oversupply in China, bolstered by relatively high copper prices and the absence of COVID-19-related restrictions. While large wire and cable producers have resumed a normal pace of production, small and medium-sized manufacturers are expected to operate at lower rates until the end of February due to insufficient orders from the real estate sector. So far, the expected post-holiday surge in pent-up demand following the easing of COVID-19 restrictions has failed to materialize. In China, SHFE copper stocks rose to 241,991 tonnes two weeks after the Lunar New Year holiday, which is close to the peak level of 266,437 tonnes from the same period in 2018. interest rates when inflation came in slightly above expectations at 6.4% in January. economic data as the Federal Reserve adopted a more hawkish outlook for U.S. A slower-than-expected demand recovery in China following the end of the Lunar New Year holiday resulted in a spike in cathode stocks. 27 as optimism for the demand outlook faded. The LME 3M copper price closed at $8,862/t Feb. We have upgraded our LME 3M price forecast for 2023 to $8,882/t and kept price forecasts after 2023 unchanged from the January edition of the CBS. In contrast, copper supply outside China is tighter, with major maintenance outages at key smelters prompting us to downgrade our global refined copper balance for 2023 from a surplus of 202,325 tonnes to 77,325 tonnes. An increase in scrap availability has also contributed to an oversupply in the Chinese market. Federal Reserve's more hawkish tone on U.S. Therefore, we expect the LME 3M copper price to peak in the June quarter at $9,210/t.Ĭopper prices have come down since late January due to a slower-than-expected demand recovery following the Lunar New Year holiday and the U.S. Meanwhile, cathode output will start to be constrained by a seasonal maintenance period for Chinese smelters. * We have upgraded our London Metal Exchange three-month, or LME 3M, price forecast for 2023 to $8,882/t on the expectation that global copper demand will strengthen from April. These factors have led us to downgrade our forecast concentrate surplus to 268,281 tonnes in 2023. * Mine supply issues in Chile and Peru and a recent production halt at Grasberg in Indonesia due to heavy rainfall and flooding have put additional pressure on copper smelters to secure concentrate to meet their requirements. * Increased maintenance activity at smelters outside China has led us to downgrade our global refined copper balance for 2023 from a surplus of 202,325 tonnes to 77,325 tonnes. European consumers' low acceptance of Russian materials and global supply-side disruptions may be contributing to tightened cathode availability. * Ex-China copper supply is tighter, however, with cathode stocks at London Metal Exchange and COMEX continuing to fall. * An increase in scrap availability, thanks to relatively high copper prices of about $8,900 per tonne and the absence of COVID-19-related restrictions, has also contributed to the oversupply in the Chinese market. Large wire and cable producers in China have returned to normal production levels, while small and medium-sized manufacturers will likely continue to operate at a slowed rate until the end of February due to weak demand from the domestic real estate sector. * Shanghai Future Exchange, or SHFE, copper stocks reached 241,991 tonnes two weeks after the Lunar New Year holiday, close to the 2018 high of 266,437 tonnes. In the monthly Commodity Briefing Service report, or CBS, S&P Global Commodity Insights discusses the copper market within the broader macroeconomic environment and provides rolling five-year supply, demand and price forecasts.
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