Last year was a strong year for base metals such as copper, aluminum, zinc, nickel and steel despite the raging pandemic that affected numerous industries. For instance, the pandemic led to a reduction in the number of workers at mines, with most developing countries closing refineries and mines due to high rates of infection, which in turn impacted levels of production. Companies such as Glencore, BHP and Southern Copper even announced decreases in their levels of production as a result of the pandemic.
The physical market’s tightness and the high copper price environment also prompted China to release a considerable amount of its strategic copper reserves to the market. China is the metal’s largest consumer globally as well as the biggest producer of refined copper. Even after this, however, the deficit in the international refined copper market grew deeper last year, hitting 900,000 tons, which is even higher than the metal’s 2020 deficit of 530,000 tons.
However, despite this deficit, the electric vehicle (“EV”) boom boosted demand, with recent statistics demonstrating a growth in sales of electric cars. For example, sales of hybrid plug-in electric cars grew by 40% year-on-year in the United Kingdom. This growth pushed the price of copper up, with data showing that in 2021, the metal’s price grew by roughly 20%. While this isn’t as big as its 80% increase from its 2020 low, it is still significant.
Analysts expect refined output growth to outpace refined demand growth for copper, which will push inventories even lower and apply more pressure on the metal’s spot prices. Analysts also believe that the demand for electric cars will keep copper afloat this year as the green transition is a key theme for the metal. The metal’s role in various rapidly growing industrial sectors such as semiconductor wiring, telecommunications infrastructure, electronics and construction is also boosting its demand.
In addition, the analysts note that while they expect the price of copper to remain on an uptrend in 2022, the metal’s demand from new energy is more of a long-term positive force whose material impact on the market will be felt toward 2030. Some speculate that the metal’s price could increase as the demand rises, with supply and demand deficits expected to continue.
Data from Bank of America backs this claim, with estimates showing that by 2025, a metric ton of copper could be going for $20,000. Bank of America also expects that the copper market will rebalance in 2023 and 2024 after incurring deficits in 2021 and 2022, before inventories begin declining again in 2025. With such a bullish forecast, players in the base metals segment such as Asia Broadband Inc. (OTC: AABB) are likely to see increased interest in their stocks.
NOTE TO INVESTORS: The latest news and updates relating to Asia Broadband Inc. (OTC: AABB) are available in the company’s newsroom at https://ibn.fm/AABB
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