Market analysts predict tighter supplies of copper as a result of higher demand in China and elsewhere, and the decline in production volumes, which would lift up the prices.
Researchers at UBS said that increasingly tighter supplies of copper in the coming 6 to 12 months could lead to a deficit of more than 200,000 tons in 2025, predicting London Metal Exchange (LME) prices to average $10,500 and $11,000 per ton in 2025 and 2026, respectively.
"Demand from the new energy vehicles, solar, wind and China's grid investment remains resilient; and copper is also benefiting from high-growth industries such as the data centres for artificial intelligence (AI) and defense needs," said Sharon Ding, head of China Basic Materials at UBS.
Moreover, consumption in Europe and the United States is likely to improve as an easing monetary cycle will help to raise finance for traditional industries such as construction, manufacturing and consumer durables. UBS says that supply is likely to see a reduction by late 2024 or early 2025, as most copper smelters are suffering losses due to historically low treatment charges.
In turn, Goldman Sachs raised its average copper price forecast for 2025 to $10,160 per ton, from $10,100 per ton earlier, citing higher demand potential in top consumer China following stimulus measures.
China's finance ministry earlier unveiled a fiscal stimulus package aimed at reviving the flagging economy and achieving the government's growth target.
"We see two-sided policy risks to prices with upside risk from potential further stimulus but downside risk from any potential rise in US-China trade tensions," the bank said.
Theodor Lisovoy, Managing Editor, Rough&Polished
