LONDON – Last year it was the strength of demand that caught the copper market by surprise. Everyone had braced themselves for an expected hard metallic landing in China, the driver of global copper usage. But that’s not how things played out.
China itself, it seems, was not quite ready for the promised shift from the old model of fixed asset investment to what was touted as the “new normal” of slower, more consumer-oriented growth.
Infrastructure and property investment boomed again, as did the country’s appetite for copper. Imports of both unwrought copper and mined concentrate probably hit record highs last year, judging by the preliminary figures released last week.
As for the supply side of the pricing equation, the biggest surprise was the relative lack of surprises.
The amount of global copper supply lost due to unscheduled production losses was 3.5 percent, compared with the historical norm of around 5-6 percent, according to research from Citi. (“Copper – a possible return to normal mine disruption in 2017”, Jan. 10, 2017).
It was, in other words, a year of collectively good performance by the world’s producers. Can they keep it up this year against an expected backdrop of much slower, if not flat, mined supply growth?
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