Indonesia’s Delay of Its Ban on Copper Exports Could Weigh on Prices

Indonesia, a major copper producer, has decided to postpone the start of a ban on its copper concentrate exports until the end of the year in a move that could deflate copper prices after they hit a record high in May.

Indonesia wants its local copper miners to build smelters and start processing the raw material locally, to boost the economy and offer higher-value copper products that are crucial for clean energy equipment and grid upgrades.

The top copper miners in Indonesia, Freeport Indonesia, and Amman Mineral, were expected to start copper processing at their respective new smelters in May 2024, and they had export permits for copper concentrate until May 31.

Indonesia’s Trade Ministry has been giving miners export permits to continue exporting copper concentrate until their newly built smelters ramp up production and reach full capacity.  

Indonesia has previously planned to impose a ban on exports of copper concentrate beginning on June 1. But the start of the ban will now be postponed to December 31, 2024, Bloomberg quoted Budi Santoso, director general for foreign trade at the Trade Ministry, as saying on Friday.

The delay of the start of export restrictions could weigh on sentiment in the copper market, where prices hit a record high this month, topping the $11,000-per-ton mark for the first time ever.

Despite weak fundamentals, especially in China, copper prices have rallied in recent weeks as many traders bet that a supply shortage could materialize soon on the market.

Copper stocks monitored by the Shanghai Futures Exchange continue to rise counter-seasonally, hitting 322,000 tons, well above the 130,000 tons seasonal average, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Friday.

“We have argued for some time that the scale of the move higher in copper had become detached from short-term fundamentals,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a Friday note.

“Robust Chinese refined copper output, seasonal higher SHFE copper stocks, and negative refined import premiums for China suggest a less supportive market in the near term.”

By Charles Kennedy for Oilprice.com

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