The recovery of global copper mine production is faltering
Copper prices will fluctuate in 2020. Under the impact of the epidemic in the first quarter, the market panicked, and the price of copper fell below US$4,400/ton, puncturing the cash costs of most mining companies. In the second quarter, the epidemic in South American countries such as Chile and Peru, which are major copper mines, began to worsen. Market concerns about the supply of copper mines intensified, and processing fees TC continued to decline. As some major mining companies announced that mine production and transportation operations were blocked, copper prices accelerated .
In the second half of 2020, as China's economy continues to improve, the European and American economies are stimulated, the US general election has landed, and vaccines have advanced, copper prices have repeatedly hit new highs. As of January 8, 2021, LME copper closed at US$8084.5/ton, up 31.05% compared to the end of 2019, and the strongest performance among non-ferrous metals.
In the first three quarters of 2020, copper mine output will grow negatively, and processing fees will remain at an absolute low level
The output of the world's top 15 mining companies in the third quarter of 2020 is affected by the epidemic and other factors, and the decline is still large. Due to concerns about the epidemic, some mining companies have restricted the flow of personnel, raw materials, and finished products, and lowered their production expectations again, superimposing the recent parts in South America. Mine strikes are disrupted, and the uncertainty of copper mine output remains high.
By mining companies:
Rio Tinto's production fell sharply by 60,600 tons (-28%). Due to the delayed restart of the smelter and the decline in copper grades, the output of its Kennecott copper mine in the United States fell by 40% and the smelting output fell by 74%. Subject to the Kennecott smelting problem, the company once again lowered its annual forecast by 30,000 tons.
BHP's production in 2020 will drop by 16,500 tons (-4%). The Escondida mine under the epidemic control mine has reduced its output due to the reduction of mine operators and the decline in mine grade. The company's output in fiscal 2021 is expected to remain at 1.5625 million tons.
Antofagasta's production fell sharply by 27,400 tons (-14%), mainly due to the maintenance of its Los Pelambres and the decline in the copper ore grade of the Antucoya mine. The 2020 annual output is expected to remain at the lower edge of the range of 72.5-75.5, but it is still subject to the assumption that no mines will suspend production due to the epidemic.
MMG's production in 2020 will fall by 13,400 tons (-12%). The company lowered its production forecast for 2020 by 50,000 tons to 381,500 tons. The Las Bambas mine was severely affected by the epidemic and transportation.
Vale's 2020 production fell by 10,700 tons (-11%). The main reason behind this is the impact of the epidemic on the production of Brazil and Canada's mines, and the second is the maintenance of the Sudbury mine and the decline in copper ore grade. The annual output is expected to remain at 370,000 tons.
First Quantum's production increased by 18,900 tons (+10%), mainly due to the gradual recovery of Sentinel and Cobre Panama production, which resulted in record production increases.
Freeport's production fell slightly by 91,000 tons. Based on the current production status and its assessment of its mines, the company raised its 2020 sales forecast by 13,600 tons.
Anglo American's production increased by 6,800 tons (+5%), and the company's copper mine output in 2020 is expected to remain unchanged at 645,000 tons.
Based on the epidemic situation in major producing areas and the output expectations of mining companies, it is expected that the recovery of copper mine production in the short term will be limited, and the copper processing fee TC is unlikely to rebound substantially.
The recovery of copper mine output in 2021 will increase, but there is a high probability that it will be substantively reflected in the second half of the year
According to the production expectations of some large copper mining companies in the world, the recovery of copper mine production in 2021 is mainly a restorative increase in the interference of the 2020 epidemic, and the release of endogenous copper mine production capacity is relatively insufficient. Larger new capacity projects in 2021, such as Zijin Mining's Kamoa-Kakula project in Congo, will not be put into production until July.
In terms of restorative growth, the current overseas epidemic is still serious, and the output of copper mines has returned to the level before the epidemic.
Global copper mines are expected to increase by 917,000 tons in 2021, a growth rate of about 4%. However, due to the resumption of the epidemic and the release of new production capacity in the second half of the year, there is a high probability that copper mines will continue to be relatively short in the first half of the year.
The processing fee for short-term orders has dropped to less than US$50/ton, and copper smelters are under greater operating pressure
China Copper, Tongling Nonferrous Metals, Jiangxi Copper, Jinchuan Group and Freeport have determined that the long-term processing fee for copper concentrates in 2021 will be US$59.5/ton, which is a decrease of US$2.5/ton from the previous month. This side proves that the current market is against copper in 2021. Expectations for growth are not particularly optimistic.
