The slowdown in China’s economy continues to weigh most heavily on the prices, and hopes for a quick rebound in the first few months of the year, following the lifting of covid restrictions, have not materialized. High interest rates negatively affect global economic activity, which reduces the rate of growth in demand for raw materials, including copper. With increased supply coming from new mining projects now being launched, this puts negative pressure on metal prices. On the other hand, the energy crisis has helped accelerate the energy transition, of which the red metal remains one of the main beneficiaries. Based on this belief, investor interest and the weakening of the dollar, in which commodity prices are denominated, are factors supporting copper prices ahead of a possible correction.
Outlook
Despite uncertainties in the economic environment, the KGHM Polska Miedź S.A. Group expects to maintain stable operating, economic and financial results in 2023, secure debt levels and achieve ambitious development and investment targets.
Outlook for 2023
However, given the ongoing armed conflict in Ukraine and the observed economic slowdown (especially in the world’s largest economies), as well as high levels of inflation and turmoil in the energy markets, there is still uncertainty about the direction of the economic and social situation in Europe and the world.
During the first months of this year, the global economy continued to face the effects of the energy crisis, which were particularly severe for the European economy due to its heavy dependence on Russian hydrocarbons. Russia’s invasion of Ukraine, high energy prices and high consumer demand with strained supply chains were among the main drivers of inflation. Rising prices, with the labour market remaining very strong, have contributed to rising wage pressures in many countries and the threat of inflationary processes becoming entrenched for longer. This has prompted central banks to tighten monetary policy noticeably, hampering the potential pace of economic growth.
The Company anticipates that the most significant factors influencing the results achieved by the KGHM Polska Miedź S.A. Group in 2023 may be:
of the Chinese economy and the determination of the Chinese government to increase economic activity through the introduction of stimulus packages, which would affect the demand for metals and provide support for their prices.
is one of the main factors affecting the KGHM Group’s financial results. The strong resilience of the Polish economy to events related to the war in Ukraine, the energy crisis and high inflation have contributed in recent months to a marked strengthening of the zloty towards levels seen before the outbreak of the armed conflict.
its effectiveness in reducing inflation rates and its impact on the level of global economic activity will shape the outlook for metal demand growth and prices in the medium term.
will be one of the factors influencing energy commodity prices. A hot summer, drought or early cold winter can contribute to significant fluctuations in the price of individual energy commodities that are part of the cost.
and the system of economic sanctions remain risk factors, but they do not pose a direct threat to maintaining the continuity of production, and the strategy of supplier diversification applied throughout the KGHM Polska Miedź S.A. Group and the use of alternatives effectively mitigates the risk associated with disruptions in the supply chains of raw and other materials.