After Surging, Copper Prices Trend Downward in the First Half of 2023

Copper is a mined mineral used in the production of various electronic components, including smartphones, computers, electric vehicle batteries, and even solar power plant (SPP) machinery.

Despite its many uses, the price of this commodity tended to weaken in the first half of 2023.

According to World Bank data, in June 2023, the average price of copper with a minimum purity of 99.99% on the London Metal Exchange (LME) reached USD 8,396.5 per ton.

This price increased by 2.2% compared to May 2023 (month-on-month/mom), but weakened by 7.1% compared to January 2023 (year-to-date/ytd), and was 7% cheaper than a year ago (year-on-year/yoy).

Previously, copper prices had surged since May 2020, reaching a record high in March 2022.

According to the World Bank, this price surge was triggered by low copper supply and high demand, especially from the Chinese industrial sector and other developed countries.

However, from the second quarter of 2022 until now, the price has fluctuated with a weakening trend. The World Bank also projects that the price will continue to fall until 2024.

In its April 2023 edition of the Commodity Markets Outlook report, the World Bank projects that the average copper price will fall from USD 10,000 per ton in 2022 to USD 9,700 per ton in 2023, and then further down to USD 9,000 per ton in 2024.

This projection is based on the expectation that copper production from major producing countries, namely Chile, Congo, Mongolia, and Peru, will increase within the next year, thus making the price cheaper.

Nevertheless, the World Bank predicts that copper prices will strengthen again in the long term, driven by increasing demand.

"In the long term, copper will increasingly benefit from rising demand from the renewable energy sector, especially photovoltaic SPPs, as well as electric vehicles and their infrastructure," said the World Bank.

"The decision by European countries to reduce their dependence on Russian natural gas could also increase copper consumption if they accelerate investments in renewable energy," it continued.