<article><p class="lead">Chilean copper agency Cochilco has significantly increased its price forecasts for this year on expectations of a short-term deficit in the global market.</p><p>Cochilco raised its average copper price projection to $4.30/lb for 2021, up from a forecast of $3.30/lb that was made in January.</p><p>The average price for copper next year is forecast at about $3.95/lb, up from previous estimations of $3.00/lb.</p><p>An expected supply deficit in the short term, along with reduced inventories in metal exchanges, will provide fundamental price support, Cochilco executive vice-president Marco Riveros said. By the end of 2021, the refined copper market is expected to be in a deficit of 145,000t, while at the end of 2022 a surplus of 46,000t is forecast.</p><p>"The macroeconomic scenario [for the rest of 2021] of the main copper-consuming economies is positive for the demand of the metal. The depreciation of the US dollar consolidates downwards after the rise in unemployment in the US during March and fiscal policies and expansive monetary policies," Riveros said.</p><p>"On the other hand, the global supply of concentrates of copper remains low, which has led to treatment charges and refining to minimal levels. While China would continue to drive the demand, the growth of refined copper imports would tend to be moderate during 2021."</p><p>Demand for refined copper this year is expected to total 24.2mn t, a 3.4pc rise on demand in 2020, as countries ex-China recover from lost consumption last year. A further rise is expected in 2022, with refined demand increasing by 3.8pc from 2021's forecast to 25.1mn t.</p><p>Global mined copper production is anticipated to grow by 2pc on an annual basis this year, to 21mn t, because of a widespread recovery in the leading copper-producing countries. In Chile, output is projected to increase by 1.8pc on the year to 5.8mn t.</p><p>But there are risk factors that could produce price volatility, such as an uncontrolled increase in the number of Covid-19 infections evident in India recently and a potential inflation risk in China, Riveros said.</p><p>Chile and Peru — the two leading mined copper producers — are still trying to overcome the impact of the Covid-19 pandemic, Cochilco said.</p><p>"There are also complex political [and] tax factors that, if materialised, could affect future levels of investment in mining in both countries," the agency said.</p><p>A <a href="https://direct.argusmedia.com/newsandanalysis/article/2212742">mining royalty</a> is being considered in Chile, with the country's lower house of congress voting in favour earlier this month, which critics say could drive away investment. The bill will now head to the senate for further consideration.</p><p>In Peru, similar measures have been proposed in the manifesto of presidential candidate Pedro Castillo.</p><p class="bylines"><i>By Corey Aunger</i></p></article>
