Copper, widely used in industry, is facing a shortage that could last until 2030. Reuters
The financial website CNBC reported that due to increasingly severe supply from South America and rising demand pressure, the world is facing a copper shortage. Analysts predict that the shortage will continue until the end of this year, or even 2030. Tighter supplies of the industrially-used red metal, long seen as an important indicator of trends in economic activity, could signal worsening global inflationary pressures, forcing central banks to remain hawkish for longer.
Robin Griffin, vice president of metals and mining at Wood Mackenzie, said: "We predict that there will be a severe shortage of copper until 2030." He attributes this to the continued unrest in Peru and the energy transition. Unrest has cascading effects. It is obvious that mines may have to close ".
Peru supplies 10 percent of the world's copper, but the South American country has seen daily protests since former President Castillo was impeached and ousted by Congress in December. Mining giant Glencore announced on January 20 that it would suspend operations at its Antapaccay copper mine in Peru after the plant was looted and set on fire by protesters.
Elsewhere, production in Chile, the world's top copper producer, accounting for 27 percent of global supply, fell 7 percent in November from a year ago. According to a Goldman Sachs report dated Jan. 16, the bank said, "Overall, we believe that production in Chile will be reduced between 2023 and 2025."
Copper futures settled at $4.035 a pound on Monday, well above the yearly low of $3.23 last July, CME data showed.
Tina Teng, a market analyst at CMC Markets, said the reopening of mainland China and increased demand for a clean energy transition had improved the demand outlook for copper, pushing up copper prices. "Shortages are likely to persist until 2024 and 2025 until current headwinds lead to a potential global recession," he added, predicting that copper prices could double by then.
Although Timna Tanners, managing director of Wolfe Research, does not think that the economic recovery in mainland China will cause a "surge" in copper activity and consumption, because "copper consumption is not slowing down in 2022, factories are still running, government stimulus measures and infrastructure are continuing. Propulsion", but the phenomenon of wider electrification may be a fundamental driver of copper demand. "Until there is charging infrastructure, electric vehicles will not take off, and electrification requires more copper."
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