New Delhi: China is expected to amplify its stimulus efforts next year, potentially boosting demand for metals, with copper consumption forecasted to rise, the Commodity Outlook Report 2024 by ICICIDirect said in a report. As the country ramps up its economic stimulus, imports of unwrought copper, copper products, and ores are projected to increase in anticipation of higher demand.
ICICIDirect’s report, led by Head of Research Pankaj Pandey, indicates a continued upward trajectory in China’s refined copper consumption, with domestic production also set to climb. The Chinese government’s potential moves, including lowering the Required Reserve Ratio (RRR) for major banks, could further energize metal demand and support copper prices.
Demand from China’s green energy sector, notably for electric vehicles and power infrastructure, is expected to underpin copper prices. The country’s increased support for its property sector and the possibility of unveiling new stimulus measures could provide additional impetus for copper consumption.
The report also highlights that global copper supply may face disruptions due to issues in major producing countries like Chile, Peru, and Panama. In Chile, operational challenges and water supply issues are impacting mine production, while community actions in Peru are expected to affect mining investments and output negatively. Meanwhile, a significant mine in Panama has been ordered to halt operations, potentially impacting 1% of global copper production.
Amid these supply concerns, copper prices are likely to rally, potentially approaching INR 825 levels, driven by a combination of supply-side constraints and optimism over China’s economic measures. A weakening dollar and the expectation of rate cuts in 2024 further bolster this outlook, as China may roll out more stimulus packages to aid economic recovery.
