For the last several months, metal markets have remained tough to predict because of the pandemic’s various impacts on demand and supply and the overall economic climate. Still, prudent businesses must base forecasts upon the best information they have available. Take a look at this year’s copper market and business developments to gain perspective on the copper market for 2022.
Record Low to Record High Copper Prices
The copper market has lacked price stability since the spring of 2020. For example:
- In March of 2020, early in the pandemic, copper prices bottomed out to four-year lows at about $4,371 a ton. At that point, equities and commodities markets dropped when the COVID-19 crisis began to unveil itself as a critical global problem. Illness and social distancing measures also slowed down production and transportation.
- By July of 2021, the price had soared to $10,123 a ton. In particular, Chinese demand increased sharply. According to Mining.com, mining and supply chain slowdowns still depleted supplies, which put more pressure on the price.
As of the date of this article, a ton of copper sells for $9,784.50. Some copper analysts called the drop from all-time highs a slump, though nobody called it a crash. The price declined from the July high but still held at over twice last year’s low.
Forecast for Copper Markets in 2022
Reuters predicted that prices would continue to slide in 2022 for the inverse of the reasons they spiked so sharply last summer. Many miners have brought production back online, increasing output to alleviate supply shortages somewhat. At the same time, softening Chinese demand, a power crunch, and a weakened property market combined to reduce forecasted demand. In any case, Reuters posted an estimate of about $9,000 a ton for 2022, which still slightly tops some previous forecasts.
Still, Bank of America analysts disagreed with Reuters and predicted that low inventories could propel the price of copper over 2021’s highs. They believed the price could rise as high as $13,000 a ton, far surpassing previous highs.
One Perspective of an Unpredictable Copper Market
Economists sometimes refer to the copper market as Doctor Copper. Almost all industries rely upon this critical metal, including energy, construction, transportation, manufacturing, and electronics. Thus, this base metal’s price tends to reflect overall economic conditions. Increasing costs per ton signal a flourishing economy with high production levels, and prices generally decrease when economic growth slows.
Put simply, adjust expectations for copper demand alongside expectations for economic recovery and growth. At the same time, factor in expectations for such critical supply chain components as mining and transportation. Not all sectors of the economy will recover at exactly the same pace.
Anticipating future prices allows companies to make the right plans. Considering the fluctuations in the copper market during 2020 and 2021, companies probably need to build as much flexibility into their plans as possible.
Rely on Belmont Metals for Copper Products, Prices, and Services
If the price of copper increases or decreases, Belmont Metals offers their customers good value. We care about service, products, quality, variety, and constant improvement through using the latest metal technology. Contact us today or shop online.