Copper price in Q4
Copper started the fourth quarter of the year on a strong note. On October 2, the metal reached its quarterly high of US$4.60 before starting a month-long slide to US$4.31 on October 31.
Volatility was the story at the start of November. Copper soared to US$4.45 on November 5 before dropping to US$4.22 on November 6, then spiked to US$4.41 on November 7; finally, it crashed to US$4.05 on November 15.
Copper price, Q4 2024.
Chart via Trading Economics.
While copper did see a couple of rallies as the year ended, it only briefly broke through resistance of US$4.20 from December 9 to 11 before settling toward the US$4 mark at the end of the month.
As of December 23, the copper price was sitting at US$4.02.
Copper concentrate market to stay tight
In an October report, Fastmarkets predicts that the concentrate market will remain tight in 2025.
This tightness will continue to impact refiner treatment charges. Though they are expected to rebound to around US$20 to US$30 per metric ton (MT), they will still be short of the US$80 mark reached in 2023.
The situation has become more challenging as new operations, particularly in China, expand capacity in 2024. Fastmarkets anticipates no change in the situation in 2025, as new smelters are set to come online in China, Indonesia and India. The additional capacity will see more refiners fighting for the available supply.
The research firm says several other factors are contributing to copper concentrate shortages, including the loss of material from First Quantum Minerals' (TSX:FM,NYSE:FM) Cobre Panama mine after it was ordered shut down in November 2023. Other miners that have cut their production forecasts are also adding to supply woes.
For example, Teck Resources (TSX:TECK.A,TECK.B,NYSE:TECK) revised its copper production guidance when it released its third quarter results on October 23. In its release, Teck indicates that the updated range now stands at 420,000 to 455,000 MT, down from the 435,000 to 500,000 MT estimated at the start of the year.
The company said the reduction was due to challenges with labor availability and problems with autonomous systems in its new haul trucks at its Highland Valley mine in BC, Canada.
China’s economy dragging on copper
A significant headwind for copper at the end of 2024 has been the continued challenges posed by China’s faltering economy. Although the country has introduced stimulus measures, they have made little difference.
The most recent stimulus announcement came on December 24, when the Chinese government announced it would issue US$411 billion worth of special treasury bonds in 2025. This package would be the highest on record, and would represent an increase over the US$137 billion issued in the past year.
The move follows President Xi Jinping’s keynote address at the country’s annual economic policy meeting on December 11 and 12. Xi said at the time that the economy was stable, and that the government would be working to boost consumption through looser monetary policy and more active fiscal policy. Few details were given on how the country would achieve its goals, and the US$411 billion debt injection could be the first sign of that policy.
In addition, in September, the Chinese government announced measures to increase credit, support cities in purchasing unsold homes and restructure debt. These efforts have failed to turn around the world’s second largest economy.
China is the world’s largest copper consumer, and any shift in the strength of the nation's economy will have implications for the price trajectory of base metal.
How did copper perform for the rest of the year?
Copper supply was in focus in Q1 as First Quantum provided an update on its Cobre Panama mine.
The mine was forced to close at the end of 2023 after the Panamanian Supreme Court walked back a company-friendly deal initially approved in October 2023.
At the beginning of 2024, First Quantum pursued several avenues to resolve the issue and reopen the mine, including arbitration. It also waited for the results of Panama’s May election in hopes of more mining-friendly leadership.
The second quarter was dominated by news of output curtailments at Chinese smelting operations.
The cuts came as lower production levels from copper miners began to stress treatment charges at refiners as they competed for the limited availability of copper concentrate.
Speaking to the Investing News Network at the time, Joe Mazumdar, editor of Exploration Insights, said that 50 percent of the world’s smelting capacity is in China. For that reason, the end price is dictated by treatment and refining charges, which nearly turned negative due to the lack of available concentrate.
In turn, this pushed the price of copper prices higher at major exchanges.
“So there’s the cathode price. That’s stated in the LME, and Shanghai and the COMEX in the states. But if the market is tight in any of those regions locally, you will see a cathode premium … over the price of the copper,” he said. “People are willing to pay more to incentivize people that have copper inventory to release it into the market."
Copper supply and demand both saw growth during Q3.
The International Copper Study Group reported in an October 21 release that mined production of copper had increased by 2 percent year-on-year to 14.86 million MT during the first eight months of 2024.
Much was owed to 3 percent growth from Chile, with increases at BHP’s (ASX:BHP,NYSE:BHP,LSE:BHP) Escondida mine, as well as the Collahausi mine, which is a joint venture between Anglo American (LSE:AAL,OTCQX:AAUKF), Glencore (LSE:GLEN,OTC Pink:GLCNF) and Mitsui (OTC Pink:MITSF,TSE:8031).
Output from the Democratic Republic of Congo increased 11 percent, while Indonesia's production rose 22 percent.
At the same time, demand increased slightly by 2.5 percent. Much of the additional demand came from 2.7 percent growth in Asian markets, which includes a 0.5 percent increase in Chinese refined copper imports.
Investor takeaway
The copper market has been tight all year, with new demand accelerating beyond new mine supply.
This demand growth is expected to continue as the world transitions from fossil fuels to renewable technologies that require more copper, like wind and solar. However, copper demand is still constrained by weakness in the Chinese economy, particularly in its housing sector, which is an important driver of global demand for the metal.
Ultimately, in the longer term, copper supply will be lacking from new projects and expanded production to meet demand. The base metal is expected enter a supply deficit over the next few years.
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Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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