BHP Group Foresees Copper Demand Rollercoaster Despite 5.06% Stock Dip

BHP Group (BHP) saw a decline of 5.06% on September 3rd.

The company, as the world's second-largest copper producer, expressed cautious optimism about copper's short-term prospects while maintaining a long-held view that this energy transition metal will eventually face severe shortages, leading to significant price increases. BHP has revised down its forecast for China's copper demand this year, anticipating a slight oversupply until the end of 2025 but expecting a "price surge" around 2030 due to long-term supply deficits.

Copper prices had peaked at record highs in May but have since retreated amid dimming demand outlooks. BHP's forecast sees China's copper demand growing by only 1% to 2% this year, a downward revision due to ongoing transformations in the Chinese real estate market. The company anticipates increased volatility in commodity markets over the next 18 months.

BHP reaffirmed its outlook that in the long term, global copper supply will struggle to meet the imminent demand from renewable energy infrastructure, data centers, and electrical grid expansions. The company also highlighted that as we approach the latter third of this decade, the supply-demand gap could lead to significant pricing disconnects, with prices likely spiking due to systemic demand expansion and insufficient inventory levels.

On August 30, BHP Group stated that the South Australian government had officially commenced the assessment process for the expansion of the Olympic Dam copper mine and smelter capacity. The smelter's 2023 copper cathode production was 322,000 tons. The company plans to expand the mine and smelter’s annual production capacity to 500,000 tons by the early 2030s and further to 650,000 tons by the mid-2030s, finalizing investment plans by 2027.