LONDON/BENGALURU- Copper prices are expected to hold steady next year after sliding sharply in 2022, a Reuters poll showed, as rising supply is balanced by tight inventories.
Copper prices have shed about a fifth so far this year, weighed down by rising interest rates, a potential global recession and strict COVID curbs in top metals consumer China.
Most industrial metals prices have been pulled two ways this year – depressed by worries about sliding demand amid an economic slowdown, but supported by historically weak inventories.
The cash copper contract on the London Metal Exchange (LME) is expected to average $7,588 a ton in 2023, a median forecast of 27 analysts showed, about 1 percent firmer than Monday’s closing price.
“The copper market is expected to move into a small surplus, which will place a cap on price rallies,” said independent analyst Robin Bhar.
As miners ramp up production, analysts expect the market to swing to a surplus of 252,000 tons next year from a deficit of 70,000 tons in 2022, the poll showed.
Prices of copper as well as aluminum and nickel could be volatile, however, if Western nations or the LME impose restrictions on Russian produced metal, analysts warned.
While a weak global economy is depressing demand for aluminum in the auto, packaging and construction sectors, supply of the energy-intensive metal has also been constrained by high power prices, causing some smelters to shut.
“We expect supply to grow by just less than demand, in part due to high energy prices and an increased producer focus on investing in clean energy rather than output capacity,” said Caroline Bain at Capital Economics in London.
“In turn, we forecast global stocks to edge lower and push the price up slightly.”
The LME price of aluminum soared to a record in March, but has since tumbled 45 percent.
The LME cash aluminum CMAL0 price is seen averaging $2,413 a ton in 2023, 9 percent firmer than the current price.
Analysts have nearly doubled their estimates for an aluminum market surplus next year to 297,000 tons compared to a surplus of 150,000 tons forecast in July.
Rising output of nickel pig iron – a lower-nickel-content substitute for refined nickel – in Indonesia is expected to pressure prices next year, analysts said. – Reuters
