In 2022, the copper price fluctuates greatly. In 2023, the global copper supply and demand pattern is expected to turn into a small surplus, putting pressure on the copper price. However, based on the expectation of international policy change, the probability of sustained decline of futures copper is not large, or the lowest point in 2022 as support into the wide oscillation pattern, London copper operating range of $6,900 – $9,000 / ton, Shanghai copper operating range of 53,000 – $69,000 / ton.

Recession pressure in Europe and the United States

In 2022, faced with the threat of high inflation, overseas central banks generally adopted aggressive interest rate hike policies, and the global economy was faced with the risk of recession. The manufacturing PMI of various countries fell below the 50-point line. The U.S. ISM manufacturing index recorded 49 in November, its first recession in two and a half years. The final Markit manufacturing PMI fell to 47.7 in November, the lowest reading since May 2020. The euro zone’s preliminary manufacturing PMI came in at 47.3 in November, badly hit by soaring energy prices and supply chain disruptions, and remained below the expansion/contraction line for five months in a row, dragging down the overall economy.

In 2022, as monetary policy continues to tighten, the European and American inflation index CPI is also high and falling. The euro zone’s preliminary CPI rose 10 percent in November from a year earlier, falling more than expected and marking the first slowdown in a year and a half. The U.S. consumer price index rose 7.1% in November from a year earlier, the smallest increase in a year and another stronger-than-expected slowdown. With the easing of inflation pressure in Europe and the United States, combined with the increased risk of economic recession, the market has cooled down expectations of aggressive interest rate hikes in Europe and the United States. However, based on the resilience of inflation, the December interest rate meeting of the Federal Reserve emphasized a higher interest rate peak and the duration of interest rate hikes, and the European Central Bank also expressed a hawkish stance, predicting that the dollar will continue to maintain a high level in 2023, putting pressure on metal prices.

Copper Market Outlook: into the Range of Wide Oscillations

In 2023, under the strong expectation of economic recession in Europe and the United States, our economy will face the pressure of external demand weakening. At the Central Economic Work Conference held on December 15-16, 2022, it was pointed out that in 2023, we should adhere to the priority of stability, seek progress while maintaining stability, continue to implement a proactive fiscal policy and a prudent monetary policy, intensify macro-policy control, strengthen the coordination and cooperation of various policies, and focus on expanding domestic demand. In addition, with the gradual optimization of domestic epidemic prevention and control policies, the impact of epidemic prevention and control on the economy will be weakened, and the stable growth of domestic economy will be conducive to metal demand.

In 2023, the global copper mine is likely to maintain the expansion trend, the supply is loose, and the refined copper production capacity is also expected to increase. High profits stimulate the enthusiasm of the smelter to start work, but we need to pay attention to the tight supply of crude copper and scrap copper on its production capacity. The demand side is likely to be strong inside and weak outside. The domestic epidemic prevention policy has been optimized, and copper consumption is expected to recover, while overseas consumption is subject to the sluggish economic performance or not optimistic.

It is expected that the global copper supply and demand pattern is expected to turn into a small surplus in 2023, putting pressure on the copper price, and the copper center of gravity is expected to move down. However, based on the overseas policy shift expectation, the probability of copper continuing to fall is not large, or it may enter the wide oscillation pattern supported by the lowest point in 2022, and the London copper operating range is $6,900-9,000 / ton. Shanghai Copper operation interval is 53000-69,000 yuan/ton.