Copper: China demand strong, Congo supply at risk – Commerzbank

Commerzbank’s FX & Commodity Analyst Volkmar Baur highlights robust Chinese imports of iron ore and copper ore, pointing to rising domestic copper production despite negative treatment charges. At the same time, the Iran-related blockage of sulphur exports from the Gulf threatens sulphuric acid availability in Congo, potentially disrupting copper ore mining that already accounts for 14% of global output.

Chinese ore inflows versus Congo constraints

"Chinese metal imports got off to a mixed start this year. Iron ore imports once again bucked the downward trend in steel production, rising 10% year-on-year in January/February."

"Imports of copper ore and concentrates were also up 4.9% on the previous year, although at around 2.5 million tons per month, the level was only slightly below that of previous months. Imports are normally lower at the beginning of the year than in the rest of the year due to the Chinese New Year celebrations."

"In contrast, imports of raw copper and copper products fell by 16% compared to the previous year and, at around 350 thousand tons per month, were also significantly below the level of recent months."

"Although production figures will not be reported until next week, imports indicate that copper production in China continues to rise. This is despite the fact that treatment and refinery charges remained negative in February, meaning that copper smelters have to pay mines a premium for the right to refine the copper."

"As the Gulf region is a major producer of sulphur, which is currently unable to reach world markets due to its location on the Strait of Hormuz, there could be production problems for copper ore in the Congo in the coming weeks."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)