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Global copper market to face deficit in 2022 despite projected production growth - report

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(Kitco News) - According to Norilsk Nickel (Nornickel), global copper market in 2021 was fairly balanced as the copper demand was recovering on the back of the global economic rebound, while the US and China announced multitrillion infrastructure plans.

Global copper demand was driven by the rising importance of the ESG agenda, as governments and investors worldwide began to pay closer attention to copper intensive technologies, such as renewable energy, transport electrification and the reduction of GHG emissions, which resulted in a decrease in exchange stocks and price spikes.

Nornickel said that as a result, the average LME copper price in 2021 increased 51% y-o-y to USD 9,317 per tonne.

The company added that on the supply side, despite some issues in copper mining, the production of refined metal increased sufficiently enough to meet the higher demand.

As for 2022, Nornickel said that the copper market is expected to be in a mild deficit of 82kt in 2022 as the global consumption will be growing on the back of further post-COVID global economic recovery and increasing investments in renewable energy and transport electrification.

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“Although we forecast that mine production will grow in 2022, the increase of refined metal output will not be sufficient to match the demand, in our view,” the company noted in a report. “In our opinion, the copper market will remain generally balanced in the near term, running a deficit of less than 1% of the global consumption (or 82 kt).”

Nornickel said that in 2022, global copper consumption is expected to grow 3% to 25.1 Mt as the major economies continue their recovery after the global pandemic and ongoing roll-out of copper-intensive clean energy technologies and decarbonization plans.

In 2022, global mine production is expected to increase by 4% to 22.3 Mt owing to the ramp-up of new mines in DRC and Peru and also due to the expansion of existing projects.

Nornickel also expects that refined copper production will grow by 2% to 25 Mt in 2022.

The company stressed that in the longer run, copper demand will greatly benefit from the race for carbon-neutrality that will require massive upgrade of the backbone energy infrastructure.

Importantly, the company estimates that currently, the number of probable copper mining projects is too small to meet the upcoming demand that might shift the market into a sizeable deficit, if no new projects are started in the next 2-3 years.

Norilsk Nickel is a diversified mining and metallurgical company, the world’s largest producer of palladium and high-grade nickel and a major producer of platinum and copper. The company also produces cobalt, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium, sulphur and other products.

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