Over the next two years, copper prices are expected to rise by more than 75% due to disruptions in the mining supply and increased demand for the metal brought on by the push for renewable energy sources.

Copper prices will rise due to rising demand brought on by the switch to green energy and a probable drop in the value of the US dollar in the second half of 2024, predicts a report from BMI, a research unit of Fitch Solutions.

The markets are expecting rate cuts from the US Federal Reserve this year, which will devalue the currency and increase the appeal of copper priced in US dollars to overseas purchasers.

“The positive view for copper is more on macro factors,” Bank of America Securities’ head of Asia -Pacific basic materials, Matty Zhao, said citing likely Fed rate cuts and a weaker U.S. dollar.

Furthermore, a goal to increase the amount of renewable energy produced globally by 2030 was supported by more than 60 nations at the recent COP28 climate change summit. Citibank believes that this development “would be extremely bullish for copper.”

The Investment Bank predicted in a research from December that the increased targets for renewable energy will result in an additional 4.2 million tonnes of copper demand by 2030.

The report also stated that this might drive copper prices to $15,000 per tonne in 2025, which would be significantly higher than the record high of $10,730 per tonne reached in March of the previous year.

“This assumes a very soft landing in the U.S. and Europe, an earlier global growth recovery, significant China easing,” Citi analysts said, while also emphasizing on continued investments in the energy transition sector.

The demand for copper, which is utilised in industrial machinery and electrical equipment, usually rises with economic growth. One measure of the state of the economy is the demand for the metal.

The most recent price of copper on the London Metal Exchange was $8,559 per tonne.

The basic metal is essential to the production of wind turbines, electric cars, and power grids, and it is a fulcrum in the ecology of the energy transition.

Due to mining delays, several experts predict a bullish run for copper; Goldman Sachs projects a shortfall of more than 500,000 tonnes by 2024.

One of the biggest copper mines in the world, Cobre Panamá, saw First Quantum Minerals suspend operations in November of last year in response to a Supreme Court decision and widespread demonstrations over environmental issues.

In an attempt to save expenses, Anglo American, a significant producer, said that it would reduce copper output in 2024 and 2025.

Goldman’s analysts, who predict that copper prices will reach $10,000 per tonne this year and considerably higher in 2025, stated, “The supply cuts reinforce our view that the copper market is entering a period of much clearer tightening.”

According to BMI predictions, Chile and Peru will be the biggest winners of the copper rush. Large quantities of green transition minerals, such copper and lithium, are present in both nations and are expected to expand in value due to increased export demand and investment. Roughly 21% of the world’s copper deposits are in Chile.

“Our confidence that copper substantially re-rates into 2025 [of $15,000 per ton average] is now substantially higher,” Goldman said.

Wang Ruilin, senior copper analyst at S&P Global, noted that reduced supply also means there will be a scarcity of concentrates for newly operational copper smelters.

Copper concentrates are created by extracting copper ores from the ground. The benchmark LME price is then determined by sending them to smelters to be processed into copper.

“Copper smelters will see a supply shortage of concentrate starting in 2024, and the forecast deficits in the concentrate market is expected to deepen in 2025–27,” she said.

(Adapted from MetalsMines.com)

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