Copper Price Update: Q1 2023 in Review

The red metal's highest point of the quarter came on January 23, when it was changing hands for U$9,356. Prices performed in a choppy fashion throughout Q1, but remained well above US$8,500. Copper touched its lowest point of the period on January 4, when it hit US$8,252.

Speaking with INN about major trends seen in the copper space in the first quarter, Karen Norton of Refinitiv said it was a period where slow supply growth met sluggish demand.

“This fit in with our earlier reading of how things would pan out in the early months of this year, with prices largely rangebound,” she said. “China’s demand recovery has been somewhat subdued to date.” China is the world's top consumer of copper.

All in all, prices ended the three month period up by more than US$600, increasing over 7 percent since the beginning of the year. Copper finished Q1 trading at US$8,993.

Copper supply and demand dynamics in 2023

Copper is widely used in building construction, electrical grids, electronic products, transportation equipment and home appliances. But demand for the red metal has been under pressure from macroeconomic factors, as well as developments in China.

Demand from the Asian country has been weaker than analysts had expected, while the global macroeconomic outlook also put the red metal under pressure during the first three months of the year. That said, the demand outlook for the rest of 2023 is somewhat optimistic.

Chinese state-backed research house Antaike is forecasting that demand for refined copper in China will grow 2.7 percent this year to reach 13.68 million MT. Meanwhile, CRU Group is expecting refined copper consumption in China to rise 2.8 percent to 13.98 million MT in 2023.

“We believe, for copper, China’s COVID policy change should prove supportive for demand in the medium to long run, although rising COVID infections could weigh on demand in the immediate term,” ING’s Ewa Manthey said in a note. “However, global macroeconomic headwinds are likely to persist in 2023 and the risk of global recession will remain a threat to the demand recovery in China, capping further gains.”

It's possible supply will fall short of current market expectations and give prices upwards momentum.

“We feel this is more likely than it overshooting to the upside of most forecasts, although we still feel that relatively unspectacular demand growth will limit upside potential,” Norton said. “First quarter numbers are only just starting to come in, but as these start to filter in, it does look as if our production growth forecast for this year will more likely need to be tempered rather than raised.”

In terms of copper projects to keep an eye out for, Norton said she continues to monitor with interest the progress of the Quebrada Blanca Phase 2 project in Chile, as well as Kisanfu in the Democratic Republic of Congo (DRC). The former in particular is expected to make a substantial contribution to supply growth this year.

Chile is the world’s largest copper producer, putting out 5.2 million MT of copper in 2022, while the DRC is in second place at 2.2 million MT.

“Also we are keeping an eye out for updates on the Udokan project in Russia as news is quite sketchy,” Norton said. “Beyond that, we also track progress closely on the further expansion of the already sizable Kamoa-Kakula mine in the DRC and Oyu Tolgoi in Mongolia.”