Copper surges, may see 75% increase over energy transition
Cprices are poised for a remarkable surge of over 75 per cent in the coming two years as mining supply disruptions and escalating demand fuelled by the global shift towards renewable energy have created market disruption.
A report from BMI, a Fitch Solutions research unit, anticipates that the upward trajectory of prices will be sustained by heightened demand resulting from the ongoing green energy transition.
The report underscores the pivotal role played by the push for renewable energy in propelling copper demand to new heights. As the world embraces sustainable energy solutions, copper remains a crucial component in various renewable technologies.
Initial predictions by the International Copper Study Group ( ICSG) had foreseen a significant surplus in the copper market for 2024, but the landscape quickly shifted by year- end.
An updated forecast suggests that copper prices are poised for a remarkable ascent in 2024, fuelled by ambitious climate pledges worldwide.
Copper is viewed as a critical metal, vital for the construction of electric vehicles, power grids and wind turbines.
In October 2023, the ICSG predicted a major supply surplus in 2024, citing weak Western demand and robust Chinese copper output.
However, as the global green transition gains momentum, these forecasts are rapidly evolving. A report from BMI Fitch Solutions supports this shift, anticipating a more than 75 per cent rise in copper prices over the next two years.
Analysts predict a deficit of over half a million tonnes in 2024 due to mining disruptions, with Goldman Sachs forecasting copper prices to hit $ 10,000 a tonne by year- end, poised to surge even higher in 2025.
“Production was expected to exceed usage by 467,000 metric tonnes in 2024, a significant increase from the 297,000 metric tonne surplus predicted for 2024 in April,” ICSG stated.
However, the group emphasised that the prediction relied on the existing global project pipeline for supply and demand, a dynamic landscape evolving swiftly with the global acceleration of the green transition.
The group anticipates that copper prices might reach $ 10,000 per tonne by the end of 2024, with further increases expected in the subsequent year.
“An expected improvement in manufacturing activity, the ongoing energy transition and the development of new ( semi- manufactured product) capacity in various countries should support higher growth in world refined usage in 2024.
“The supply cuts reinforce our view that the copper market is entering a period of much clearer tightening.
“Despite a less- than- optimistic forecast for the copper market earlier in 2023, several end- of- year outlooks predict a far higher global demand for copper between now and 2030, driving up copper prices. This rising demand could lead to copper deficits unless governments and private companies invest heavily in mining activities to ensure that the output meets demand in support of an accelerated green transition,” the group stated.