Pan Pacific Copper (PPC), Japan’s top copper supplier, expects the price of the industrial metal to hover between $6,500 and $7,000 a tonne in 2021, against about $7,850 now, as demand recovery is limited and the market will register a surplus, its executive said.
PPC, jointly owned by JX Nippon Mining & Metals and Mitsui Mining and Smelting, projects the global consumption and supply of refined copper to increase by 3.3% and 2.6% respectively in 2021 from this year, Naoki Kojima, PPC’s general manager for marketing, told Reuters on Wednesday.
PPC sees the global refined copper market facing a surplus of 121,000 tonnes next year, against a surplus of 291,000 tonnes this year.
“Demand in 2021 will exceed this year’s level as governments across the globe are taking stimulus measures to boost economy,” Kojima said.
“But it won’t be back to the 2019 level as the COVID-19 pandemic will continue to weigh on demand in the first half,” he said.
Copper prices have extended their sharp recovery last week from the March lockdown lows of $4,371 to $7,973.5 a tonne, the highest since February 2013, buoyed by China’s solid demand and hefty investments by speculators amid monetary policy easing.
PPC views the current prices do not reflect fundamentals and the rally has been overdone.
“The reasonable trading range next year will be between $6,500 and $7,000 a tonne,” Kojima said.
In November, top copper producer Codelco agreed its 2021 term premiums with a major Chinese buyer at $88 a tonne, keeping steady at this year’s level.
The premium is paid on top of London Metal Exchange copper prices for physical delivery of copper cathodes into China, the world’s biggest copper consumer, and is a widely watched industry benchmark.
Kojima said that PPC wants to set its own 2021 term premiums to China also in line with this year’s level, but declined to give a specific price.
Reporting by Yuka Obayashi, editing by Louise Heavens