Copper prices continue to decline and are heading towards $9,780/t after retracing to their high in early May of $10,776.
The main trigger for copper selling has been lackluster data from leading global industrial indices, including Asian indicators. In addition, copper reacts negatively to news about possible expansion of raw material deliveries from the Mutanda mine, operated by Glencore. The company is expected to resume operations at its Congo mine next year. This would increase the supply of raw materials. This news has capped upside potential for copper prices.
That said, what we have been seeing are knee-jerk reactions after robust gains amid a string of speculative news. So far, on the 2021 horizon, the global copper market is experiencing a shortage of raw materials. The lack of supply is currently estimated at around 0.5 mln t, which is partly offset by moderate demand for copper due to the smooth recovery of global economies, so this shortage has already been partially factored into prices.
In our view, the copper shortage could keep prices within the range of $9,700-11,000/t in the medium term.