Copper Prices: Will They Continue To Surge?

As copper prices surge, recording record highs, analysts evaluate the copper market aiming to forecast the metal’s future price trajectory.

The price of copper surged to an all-time high on May 20th rising above the $11,000 per ton mark for the first time ever.

Copper is critical in renewable energy technologies, including wind turbines and solar panels, and in electronics for circuit boards and connectors. The AI technological boom and the defense industry resurgence has increased copper demand across the world.

By reading our article you will have the chance to read the latest developments related to the copper market as well some forecasts regarding copper prices.

WSJ: US And China Clash Over Copper Supply

A Wall Street Journal (WSJ) report suggested that there is an ongoing clash between the US and China as  the US administration tries to keep copper production out of Chinese control and prevent the Asian superpower from controlling the global supply of crucial metals and minerals.

One of President Biden’s senior advisers, Amos Hochstein and a team at State Department, have vowed to negotiate deals with copper producing countries in order to make sure that US companies would be guaranteed some of the rights to production.

Regarding copper, Hochstein mentioned that “we don’t have a lot of new supplies coming online around the world. What concerns me is even when a discovery is made, it could take between seven and 15 years before the first copper comes out.”

International Copper Association Forecasts Copper Demand Growing

Analysts at the International Copper Association (ICA) suggest that the green energy transition would support most of the global copper demand in the long term. 

In an article published on the ICA’s website on April 23rd, it is noted that “the CRU research demonstrates that global copper demand is forecast to grow from 28.3 million tonnes (Mt) in 2020 to 40.9Mt in 2040 with a Compound Annual Growth Rate (“CAGR”) of 1.85 percent. This growth is anticipated to come from traditional demand sectors as well as from new sectors driven by the green energy transition, such as growth in electric vehicle adoption, renewable energy integration, and grid infrastructure expansion and maintenance.”

ING: Copper New Record Highs, Debate On Sustainability

ING economists highlighted that copper prices hit new record highs but added that short-term fundamentals do not seem to justify the current price action. As a result, they urged investors to be cautious.

In a report published on May 21st, they noted: “Industrial metals extended their rally yesterday, with copper prices breaking above US$11,000/t and hitting record highs. Speculators have been piling into copper on the bullish narrative around tightening supply. However, recent price action is detached from short-term fundamentals, which are less supportive. While it is difficult to call a top in the current market, we do not believe the recent move is sustainable. We only need to look at the recent price action in cocoa and coffee to see how quickly this trend can reverse as speculators head for the exit.”

Citi: Copper Prices Likely To Consolidate In The Next 2 Quarters 

Although Citi economists acknowledge the copper prices rally taking place in the last months, they don’t hesitate to forecast that markets could see them consolidating in the next three to six months.

Commenting on the developments regarding copper market and prices, they suggested that machines are likely a large share of the ~$30bn of copper fund length additions this year.

In their report, they stress: “Investors have been right to push copper up from $8-8.5k/t to $10.5k/t over the past 3-4 months. In the coming months, some of this length is likely to turn over to consumer hedgers, along with macro and commodity-specific hedge funds, for whom we consider sub-$10k/t as inexpensive. Indeed, physical indicators (such as visible inventories, spreads and premiums) aren’t going to look great for some time as China semi-fabricators de-stock refined metal and as global scrap dealers de-stock scrap.”

Goldman Sachs: Copper Could Hit $12,000 Per Ton By End Of 2024

Goldman Sachs analysts said in a note to investors that they remain “selectively bullish” on assets such as copper, gold, and oil.

The report by Goldman Sachs noted: “We remain selectively bullish commodities because 1) demand growth remains solid, 2) we see more structural upside in industrial metals and gold, and 3) oil’s geopolitical risk premium has shrunk. We expect commodity total returns to rise from 13% YTD to 18% by year-end.”

From the perspective of copper, the investment bank suggested that copper prices could rise by 15% reaching $12,000/t by the end of this year.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.