The impact of coronavirus on global copper mining activity is expected to slow production forecasts and weaken commodity prices for the year, as China, Chile and Peru face disruption in their respective industries.

Outlook before the spread of the pandemic was for 3.4% growth in copper output across the world, according to the analysts at GlobalData. However, falling demand coupled with operational interruptions has led this forecast to be revised downwards to 1.9% growth over the year.

That would mean a worldwide production total of 21 million tonnes in 2020, with operations at the Grasberg mine in Indonesia and the Cobre Panama mine expected to offset some of the reductions elsewhere.

GlobalData senior mining analyst Vinneth Bajaj said: “Production growth in China is forecast to be around 6%, which is down from the 9.6% expected before the outbreak.

“Lockdowns in Chile and Peru will reduce the output in two markets that currently account for 40% of the global supply.

“Production in Chile is forecast to grow by 0.3% and in Peru by 2% — compared with a 1.4% decline and 2.6% growth respectively in 2019. There is also expected to be a slowdown in development of new projects.”


Impact of coronavirus on construction industry dampens copper demand forecasts

Copper is a key commodity used primarily in construction and electronics manufacturing. A downturn in Chinese economic activity due to the pandemic has severely dented its demand since the turn of the year as major industry and building projects are put on hold during lockdown measures.

With 40% to 45% of world copper demand dependent on the construction sector alone, GlobalData has revised down its demand forecast for the year, from 4.1% growth to 2.7% growth.

Trading of the metal had been rebounding towards the end of last year from the effects of the US-China trade war, which pushed prices down by 8% in 2019 compared to the previous year.

But the prolonged impact of Covid-19 has stalled this progress, with prices down to $4,775 per tonne by the end of March, compared with $5,694 per tonne at the end of 2019.


Analysts hopeful of upturn in second half of the year

While the duration of the Covid-19 health emergency remains an unknown, analysts are hopeful of recovery later in the year as economic activity begins to resume.

Bajaj added: “Our latest expectations are for global construction output to grow by just 0.5% in 2020, from an original forecast of 3.1%.

“The direct impact on construction has been the halting of work — with labour unable to get to the construction sites — and disruption to supply chains with delays in the delivery of key materials and equipment due to quarantines and travel restrictions.

“The current forecast assumes that the outbreak is contained across all major markets by the end of the second quarter — following which conditions would allow for a return to normalcy in terms of economic activity and freedom of movement in the second half of the year.

“However, there will be a lingering and potentially heavy impact on private investment due to the financial toll that is being inflicted upon businesses and investors across a wide range of sectors.”

Over the next three months, GlobalData expects copper prices to average between $4,700 per tonne and $4,900 per tonne, given the weak demand and the slowdown in industrial activity.