BHP sees upside in copper! Binns said Beijing’s focus on compliance with environmental regulations means that structural reform would continue to support premiums for high quality raw materials.
China’s belt and road initiative will drive an extra 150 million tonnes of steel demand, driven by $1.3 trillion of infrastructure development, she said.
In copper, the short-term outlook was supported by a shortage of concentrates, Binns said, after several disruptions at mines and the potential for work stoppages over wage agreements in Chile and Peru into 2018, as well as changes to China’s scrap import regulations.
BHP forecast an additional 700,000 tonnes of copper in concentrate would be produced between now and 2020, while China would add 1.5 million tonnes of copper capacity by 2020, alongside capacity expansion in India.
“There just doesn’t seem like enough copper concentrate to go around,” she said.
China’s blanket import ban on a type of assembled copper scrap from the end of 2018 could also lead to a “leakage” of around 100,000 tonnes of copper in 2018 and more than double that in 2019.
“China will be faced with a shortage for copper concentrates and a shortage of imported scrap, so it will need to provide for its growth in demand by importing more blister, anode and cathode and that is good for cathode premiums and for the copper price overall.”
Further out, demand from electric vehicles and renewables was set to drive copper consumption, she said.