Chinese copper smelters are expected to further reduce production, shut down, or extend maintenance next year due to a significant shortage of raw materials, particularly copper concentrate. This outlook was shared by participants at the CRU World Copper Conference Asia held in Shanghai.
Raw Material Shortage:
Global disruptions in mining operations and rapid capacity expansions among smelters have led to intense competition for copper concentrate, resulting in treatment charges—an indicator of concentrate availability—reaching historic lows.
Analyst Zuo Haoen from Minmetals Nonferrous Metals Company reported that the concentrate deficit is projected to exceed one million metric tons in 2024.
Production Adjustments:
Zuo indicated that Chinese smelters might moderate output cuts, shut down operations, extend maintenance periods, delay new plant commissioning, or lower utilization rates next year. The utilization rate could drop to 75% or lower.
Earlier projections of a 600,000-ton increase in copper concentrate consumption for 2024 have been revised down to 300,000 tons.
Investment Needs:
The copper mining sector requires approximately $120 billion in investments by 2030 to address the supply gap. CRU consultant Francisco Acuna emphasized that while there are numerous projects planned, many are stalled due to technical, geopolitical, and permitting challenges.
Demand Drivers:
Copper is poised to benefit significantly from the energy transition, being essential for renewable energy technologies and electric vehicles (EVs).
Demand for copper from EVs is anticipated to increase by 2.5 million tons by 2030 compared to 2020 levels. Renewable energy applications are expected to require an additional 2.4 million tons, while the grid sector may see an increase of 2.3 million tons.
Conversely, copper consumption from China’s real estate sector is projected to decline by 400,000 tons by 2030.
Future Consumption Trends:
China’s copper consumption is forecasted to reach 16.69 million tons in 2025, marking a 2% increase from 16.34 million tons this year, according to Mitsui & Co.’s general manager, Motoki Makita.
The growing demand for data centers, AI, and cloud services is expected to significantly boost copper consumption, which was only 467,000 tons last year.
Additionally, the robotics sector is predicted to contribute at least two million tons to copper demand, while advancements in flying vehicles and electrification of ships could add another 100,000 tons.