The copper market is likely to fluctuate higher this year after digesting the shocks of the previous year

Bhoo Bazar - Dilip Shah

- World market bounces back from two-and-a-half-year low: Signs of bullishness in next year as well as current year

After the copper market remained soft last year, volatility is expected to remain in 2023 as well. Due to the corona epidemic, the car of development across the world got a break, copper also got a break and the car of the economy at the global level is still not on track. Thus, while the outlook for copper is bullish over the long term, short-term volatility will remain subdued.

Along with this, it should be noted that now there is a buzz of green energy all over the world. All countries have now accepted that energy sources should be renewable in order to preserve the environment. This is why the use of solar energy is being given priority. Along with this, as copper is used everywhere in electric vehicles, copper will be in demand in the coming days. By 2030, India, the world's most populous country, will have the largest share of electric vehicles. From this it can be clearly said that there is no possibility of decrease in the demand of this red metal. Only in the current recession will the demand growth rate be low.

In the years 2020 and 2021, the manufacturing sector was at a standstill worldwide. Hence the demand for this base metal increased in early 2020. Even then the supply was limited. Hence, the price per ton on the London Metal Exchange became more than 10,000 dollars. However, the rise in prices was short-lived. After that, recessionary bells started ringing and prices hit a two-and-a-half-year low of $7,000 per tonne. Currently, the price is running around 9200 to 9250 dollars per ton. America and Europe are still reeling from recession. Even in China, there is an uproar in the name of Kovid. At present, even though China has removed the restrictions related to Corona, there is no possibility that the situation will improve. Hence the growth in copper prices will be limited.

Experts say that investment in copper is not going to go away. Giving an analogy for it, he says that if you open a lemonade stall on hot days, it is certain that there will be a smell. The question now is when will the heat wave begin.

As for China, the economy is expected to revive as the Covid restrictions are lifted, but the epidemic is unlikely to subside. In the short term, the epidemic will worsen and new problems will arise. Currently, both the economy and the epidemic are in a fragile state. Factory production there fell at the fastest pace in three years. Savas sector also has a soft situation. China's property market has been in a miserable state for the past two-three years and the government has tried to support it, but house sales have been declining instead of increasing. This factor is a major factor in the decline in demand for copper.

It has to be noted here that China once changed its policy that there should not be a single case of Corona, now we have adopted the approach of not imposing restrictions no matter how many cases occur. Millions of citizens have suffered illness due to this policy.

After talking about the world's second largest economy - China, let us talk about the largest economy - America. The US central bank has hiked interest rates significantly over the past year and its next policy will affect the value of the dollar. Along with this, the price of copper is also likely to increase.

According to the global outlook for copper released by Holland's banking group ING a few days ago, copper prices will not rise as much as expected this year.

Currently, India's economy is performing differently than all the rest of the world. Whether it is the stock market or the commodities market, there are signs of internal strength everywhere. Demand in the Indian market is expected to remain high in the short-term to long-term. A report has said that the demand for copper in India has increased by 66 percent.

Copper is currently in an overbought position. After falling enough for some time, the price will rise again. At one point, the level seen in June 2022 will be reached. Copper prices touched a high of $10,800 in March last year. Goldman Sachs estimates that prices will stabilize around $9,750 per tonne in 2023. By the year 2024, it is estimated that the price will reach the level of 12,000 dollars.

The world may appear to be heading for recession at present, but from the experience of Covid, it can be said that it takes less time than before to re-energize economic cycles and hence the medium to long term outlook for base metal copper remains strong.