Copper Market Outlook

Copper is presently engaged in a tug-of-war between negative near-term factors and
positive longer-term considerations.
Copper is facing near-term economic/trade-related concerns on the one hand, which have
negatively impacted metal pricing and demand; whilst on the other hand the outlook is
positive based on the prospect that copper mine supply will fail to keep up with burgeoning
electric vehicle (EV) demand, along with other applications.
These near-term negative issues have adversely impacted the share prices of copper
producers and aspiring producers alike, making it harder for them to gain market traction and
generate the funding that will help bring to new copper supply to market.
Near-Term Outlook
While the global manufacturing sector has experienced significant headwinds so far in 2019,
a revival of optimism in copper end-users could fuel a wider improvement over the coming
months and into 2020. Countermeasures to US trade tariffs have contributed to a rebound in
Asian manufacturing, suggesting that although demand pressures remain weak, there is the
prospect of some relief to the current slowdown.
The IHS Markit Global Copper Users PMI is a composite indicator that provides an overview
of operating conditions at specific manufacturers identified as heavy users of copper. It is
based on data provided by companies around the globe. As many copper users are
producers of primary manufacturing goods, the index that measures output levels can also
provide an indication of the direction of global manufacturing output.
The Global Copper Users PMI rose above 50.0 during September, indicating the first
improvement in business conditions since November 2018. Key to the upturn was a
moderate expansion in output, the fastest for a year, as firms looked to build stocks of
manufactured goods in hopes of stronger future demand levels.
On a regional basis, Asian copper users have seen the greatest change in the output trend
this year. Production during the second half of 2018 was mired by the introduction of US
tariffs on Chinese goods, causing a downturn in new orders and subsequent output cutbacks
across the region. China responded with fiscal stimulus measures to ease tax burdens on
manufacturers, which helped soften the decline and, more recently, lift production levels.