Copper to skyrocket to record highs by 2025

Copper prices are set to soar more than 75 percent over the next two years amid mining supply disruptions and higher demand for the metal, fuelled by the push for renewable energy.

Rising demand driven by the green energy transition and a likely decline in the US dollar in the second half of 2024 will push copper prices higher, according to a report by BMI, a Fitch Solutions research unit.

Markets are banking on the US Federal Reserve to cut rates this year which will weaken the dollar and in turn make the greenback-priced copper more attractive to foreign buyers.

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

Additionally, at the recent COP28 climate change conference, more than 60 countries backed a plan to triple global renewable energy capacity by 2030, a move that Citibank says “would be extremely bullish for copper.”

In a December report, the investment bank forecast that the higher renewable energy targets would boost copper demand by extra 4,2 million tonnes by 2030. This would potentially push copper prices to US$15,000 a ton in 2025, the report added, way higher than the record peak of US$10,730 per ton scaled in March last year.

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

A growing economy tends to boost demand for copper, which is used in electrical equipment and industrial machinery. The metal’s demand is considered a proxy for economic health.

Copper on the London Metal Exchange was last trading at US$8,559 a tonne. The base metal is a linchpin in the energy transition ecosystem, and is integral to manufacturing electric vehicles, power grids and wind turbines.

Other analysts see a bullish run for copper due to mining disruptions, with Goldman Sachs expecting a deficit of over half a million tons in 2024.

Last November, First Quantum Minerals halted production at the Cobre Panamá, one of the world’s largest copper mines, following a Supreme Court ruling and nationwide protests over environmental concerns. — Moneyweb.