Markets Expect Copper Prices to Rise over 75%
Expectations that Copper prices to rise by more than 75%
Copper prices are expected to rise by more than 75% by 2025 amid disruptions in mining supplies and increased demand for the metal, reported CNBC Arabia.
The rise in demand, bolstered by the shift to green energy and the potential decline of the U.S. dollar in the second half of 2024, is expected to drive copper prices higher, according to a BMI report. It is a research unit of Fitch Solutions.
Markets are depending on the U.S. Federal Reserve to cut interest rates this year. This would weaken the dollar and thereby make copper priced in U.S. currency more attractive to foreign buyers.
Furthermore, at the recent COP28 climate change conference, over 60 countries supported a plan to triple global renewable energy capacity by 2030. It is a step that CitiBank says “will be very positive for copper.”
In a report issued in December, the investment bank forecast that higher renewable energy targets would boost demand for copper by an additional 4.2 million tons by 2030.
The report added that this is likely to push copper prices to $15,000 per ton in 2025. This number is far higher than the record peak of $10,730 per ton recorded in March last year.
“This assumes a very soft landing in the United States and Europe, an early recovery of global growth, and significant easing in China,” said Citi analysts.
Importance of Copper
Copper, a basic metal, is the backbone of the energy transition ecosystem. It is an integral part of manufacturing electric vehicles, power grids, and wind turbines.
Other analysts also see an upward trend for copper due to mining disruptions.
Goldman Sachs predicts a deficit of over half a million tons in 2024.
Reduction in Copper Production
In November last year, First Quantum Minerals halted production at Cobre Panama, one of the world’s largest copper mines, following a Supreme Court ruling and nationwide protests over environmental concerns.
Anglo American, a major producer, said it would reduce copper production in 2024 and 2025 to cut costs.
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