The copper market is experiencing a surge as supply issues and growing demand push prices over $9000 per pound, with projections of reaching $11,000 per pound. Investment banks like Citi, Goldman Sachs, and Morgan Stanley are backing copper, despite past failed optimistic forecasts. In 2022, Goldman Sachs predicted $13,000 per ton, but instead, copper dropped to $7150 per ton. However, copper has been steadily climbing back up, and is expected to continue to rise in a more stable manner.
Goldman Sachs has warned of a significant supply shortfall, predicting the price to reach $9900 per ton by 2028. New copper production technologies are being sought to extract metal from low-grade ore. Despite efforts to find an additional one million tonnes of copper, it may not be enough to meet the five million tonne deficit projected for 2030. Morgan Stanley also sees tight supply and demand fundamentals driving copper to the top of their commodity order of preference, with a forecast of $10,200 per ton by the third quarter of 2024.
Citi has adjusted its optimism for copper, predicting a slower climb to $12,000 per ton over the next two years, as deficits support copper performance in a turbulent macroeconomic environment. Smaller banks like ING and Wilsons are also supporting copper but with more caution. ING sees supply tightness as a key driver of current prices, with expectations of further increases as demand improves. Wilsons, on the other hand, views copper as a standout commodity in a challenging year for the resources sector, citing its industrial uses across construction, consumer goods, and machinery.
With the Federal Reserve expected to implement interest rate cuts and a soft landing scenario projected for the global economy, demand for copper is expected to remain strong. Smaller banks and financial institutions are also expressing confidence in the future of copper as a commodity, with spot prices nearing a 12-month high. The growing confidence in copper’s long-term success is driven by a combination of supply constraints, increasing demands, and potential advancements in copper production technologies.
