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 CMCU0 contract on the London Metal Exchange (LME) is expected to average $7,588 a tonne in 2023, a median forecast of 27 analysts showed, about 1% 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 tonnes next year from a deficit of 70,000 tonnes in 2022, the poll showed.
Prices of copper as well as aluminium and nickel could be volatile, however, if Western nations or the LME impose restrictions on Russian produced metal, analysts warned.
ENERGY-INTENSIVE ALUMINIUM
While a weak global economy is depressing demand for aluminium 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 aluminium soared to a record in March, but has since tumbled 45%.
The LME cash aluminium CMAL0 price is seen averaging $2,413 a tonne in 2023, 9% firmer than the current price.
Analysts have nearly doubled their estimates for an aluminium market surplus next year to 297,000 tonnes compared to a surplus of 150,000 tonnes forecast in July.
INDONESIA NICKEL GLUT
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.
“Nickel is our last preference among base metals because of increasing Indonesian production and its lower exposure to European markets,” said Soni Kumari at ANZ.
Nickel prices spiked in March to record highs on short covering and panicked buying due to Russia’s invasion of Ukraine, spurring the LME to suspend trading and cancel deals.
Even though prices have slid since then, it is still the best performing LME metal this year, the only one in positive territory.
Analysts expect LME cash nickel CMNI0 prices to average $20,250 a tonne next year, down around 7% from current levels.
Analysts expect the global nickel market to see a surplus of 139,000 tonnes next year, more than double the 50,500 surplus forecast in the July poll.
