Monsters of Rock: China warns freewheeling copper price could return to earth
Copper miners could need to shelter from a bit of short term pain, with China’s largest copper producer suggesting prices are likely to fall in 2022.
Jiangxi Copper has, like other copper miners and refiners, enjoyed bull market conditions over the past year.
Reporting its 2021 results to the Hong Kong Stock Exchange Jiangxi Copper showed its profits soared on higher prices by 142.7% in 2021 to 5.63 billion RMB, around $1.2b Australian or US$884 million.
Copper touched records of US$10,700/t in May last year and briefly flirted with those levels a couple times in recent months. They are now fetching US$10,341/t on the LME.
However, those prices may not remain, with Jiangxi saying copper prices would likely slow down in the short to medium-term due to Covid-affected lower import demand in China and economic uncertainty in Europe.
“The moderate slowdown in demand coupled with the gradual recovery of supply chain bottlenecks, the rising inflation globally is expected to gradually return to normal,” the company said.
“At the same time, the weakening of stimulus policies, the decline of inventory cycle and high prices have suppressed demand. It is expected that commodity prices will fluctuate at a high level with a slight decline in 2022.”
On the plus side for copper producers Jiangxi says supply will struggle to keep up with demand in the long run, echoing the views of western analysts like Goldman Sachs, who see a world where copper prices could hit US$15,000/t.
“In the long run, the supply growth is slow, and the global copper production cannot be effectively released in the next few years, and the risk of supply shortage increases,” Jiangxi said.
“While demand is likely to grow at a higher rate under the dual stimulus of economic recovery and dual carbon targets, resulting in an expansion in the
lack of supply and demand, which will in turn lead to an increase in copper prices.”
Mining stocks were iffy in general as materials fell 0.18%, with Lake Resources (ASX:LKE) up almost 15% after announcing a non-binding lithium supply MoU with Japan’s Hanwa Co.
Neometals (ASX:NMT) is just about ready to complete its transformation from lithium miner to battery recycler after the official opening of its 10t per day lithium-ion battery recycling plant in Hilchenbach in Germmany.
The Primorbius JV between NMT and SMS Group will begin operations in the second quarter once they’ve received the plant’s operating permit.
It is the precursor to larger 50t a day operations, studies for which are being finalised ahead of investment decisions in the third quarter.
The plant is initially being supplied from a disposal contract with a German battery waster company, but feedstock’s are expected to be secured from German EV participants as well.
“Extraordinary market tailwinds support sustainable hydrometallurgical recycling to close the battery supply chain loop,” NMT said in a statement.
“Primobius is now well positioned in a commercial setting with an industrial scale solution ahead of potentially huge volumes of end-of-life LIBs requiring recycling from mid-decade.”
NMT boasts a market cap of $905 million and is up some 325% over the past 12 months.