Over the past quarter, increasing worries of disappointing growth slowdown in China weighed down on Copper. As 2Q23 progressed, it became apparent that the much-anticipated post Covid recovery for China did not materialize as most investors had hoped for. Instead, together with other high frequency activities, China’s Manufacturing PMI started to turn south yet again, amidst the further slowdown in industrial production, and renewed pullback in credit growth. 

Despite the near term weak dynamics, as we have highlighted over the past year, the longer term prospects for Copper is not so dire. Slowing mine production volumes add to potential longer term supply bottlenecks. In addition, the longer term transition to electric vehicles (EV) adds to longer term demand for Copper. E.g. China’s demand for refined copper has kept pace with its increasing electricity consumption. 

Overall, given near term uncertainty with China’s economic recovery, we maintain our mild negative outlook for LME Copper, forecasting USD 8,000 / MT in 2H23 and USD 7,000 / MT in 1H24.