Our friends at the International Copper Study Group updated their forecast of global production and consumption recently, providing valuable insight on market trends, and reminding us how much the industry has grown, and also, how much more complex it has become.
As a case in point, just 18years ago, global consumption of copper was about 15.1 million metric tonnes (mmt), with China using approximately 1.87 mmt, or about 12% of the global total. Last year, global consumption stood at 23.8 mmt, up 58% from 2000, while China consumed about 11.8 mmt, up 530%, and representing 50% of world’s total.
Basis the ICSG statistics, 2017 also saw a 252,000 mt deficit, marking the 8th consecutive year that consumption outstripped production. The expectation for 2018 sees a 43,000 mt surplus, which in the grand scheme of things is a balanced market, before the deficit returns in 2019.
Thus, it is no wonder that prices have been trending higher for the past two years, and if, “The trend is indeed our friend,” we will expect to see higher prices ahead.
To that end, the good people at The World Bank are expecting copper to average $3.08 per pound this year; $3.09 in 2019, with further gains expected in 2020 and 2021.
With more companies reporting the damaging impact of higher prices for steel, aluminum, and other metal products, along with higher energy costs, it is timely to review your hedging plans before prices rise much more. We are not in the business of forecasting prices, there are other people who are a lot better at that than we are. What we can do, is assist you in managing price risk exposure, so you don’t have to worry about what the market will do next week, next month, or next year.
An old saying applies here: “Give a man a fish, and you feed him for a day; teach a man to fish, and you feed him for a lifetime.”