Securing copper supply

Despite price fluctuations, the importance of copper metal is increasing and is closely linked to the sustainable economic development of the world in general and Vietnam in particular.

The copper market is still going through a recovery phase along with the general stability of the global financial market recently. According to the Vietnam Commodity Exchange (MXV), the copper price is currently at 8,347.5 USD/ton, about 5% higher than the bottom in May.

In the early trading sessions of August, copper prices were negatively affected by the disappointing economic data from the two major economies, the US and China. The Purchasing Managers’ Index (PMI), which is the leading measure of a country’s industrial production activities, is often a factor that greatly affects copper prices. Therefore, the fact that the US and China PMIs reached 49 and 49.3 points, respectively, both below the 50-point mark, indicating a weakening and shrinking industrial sector, is also the main reason for the recent decline in copper prices.

However, short-term fluctuations in the futures market may not accurately reflect supply and demand conditions in the physical market.

Headache finding a solution to the supply problem

In the first five months of 2023, world refined copper production reached 10.84 million tonnes, while consumption reached 11.12 million tonnes. This means the world has a deficit of more than 270,000 tonnes of copper.

Concerns about supply shortages are also driving copper prices, especially as production declines in the world’s two largest copper exporters, Chile and Peru. Codelco, Chile’s largest copper miner and producer, recently reported a 17% drop in second-quarter output from a year earlier, and cut its 2023 production forecast to 1.31-1.35 million tonnes from its previous estimate of 1.35-1.42 million tonnes.

Codelco's story reflects a bleak picture for the entire mining industry as ore quality declines and new mine development becomes increasingly difficult and costly amid inflation.

Metals miners are also stepping up their search for new mines to secure long-term copper supplies. Last week, Glencore, one of the world’s largest copper miners and traders, struck a $475 million deal to buy a stake in an Argentine copper project.

Mr. Pham Quang Anh, Director of the Vietnam Commodity News Center, said that the Governments' push to implement the commitment to "net zero emissions" by 2050 will boost the demand for copper consumption in all areas from electric vehicles to building new power grids.

According to Bloomberg, even in a recession scenario, copper consumption will still grow steadily at a rate of about 2.1% each year, and could reach 37.5 million tons by 2024. In a non-recession scenario, the world could use nearly 39 million tons of copper in 2024.

Vietnam to see surge in copper consumption

In Vietnam, the potential for growth in the electric vehicle manufacturing sector also reflects the country’s growing copper consumption prospects. According to BMI Research, a research unit of Fitch Solutions, electric vehicle sales in the country are expected to increase 114.8% year-on-year to around 18,000 units.

During the 2023-2032 period, the average annual growth rate of electric vehicle sales in Vietnam will reach 25.8%, equivalent to about 65,000 units, up from 8,400 units in 2022. The Vietnam Automobile Manufacturers Association predicts that the electric vehicle ownership rate will reach 1 million units in 2028 and 3.5 million units in 2040.

The Ministry of Transport recently submitted a report to the Government on a proposed policy to support the transition to electric cars, with three types receiving support and development incentives: battery-powered electric cars, fuel-cell electric cars, and solar-powered cars.

Previously, the Government's approval of the Power Plan VIII was also another policy move to encourage the shift to renewable energy such as wind power and solar power.

According to the forecast of the International Copper Study Group, Vietnam's annual copper consumption demand could reach 16.1 million tons/year, as our country pursues the trend of shifting energy towards green. Notably, this consumption level will be equal to that of China, the world's number one consumer today.

Copper will become increasingly essential to our country’s green transition and sustainable development. Ensuring domestic copper supply and reserves for production activities will receive increasing attention.

Besides, along with copper mining and trading activities, scrap copper recycling will play a significant role in stabilizing copper supply.

Source: https://baosonla.org.vn/thuong-mai-dich-vu/bao-dam-nguon-cung-dong-diem-mau-chot-trong-hanh-trinh-xanh-hoa-q2lRF1e4g.html