Copper prices have significantly risen, reaching near two-year highs of $10,000 per metric ton. Leading commodity trader Trafigura expects 10 million metric tons of additional copper consumption over the next decade. This surge in demand comes from various sectors, including electric vehicles, power infrastructure, artificial intelligence, and automation.
“A third of the new demand will come from the electric vehicle sector, a third from electricity generation, transmission, and distribution, and the rest from automation, manufacturing capital expenditure, and cooling systems within data centers,” Graeme Train, head of metals analysis at Singapore-based Trafigura told Reuters.
Several market analysts are revising their copper market forecasts, anticipating a potential supply deficit this year. Notably bullish is Citibank, which predicts a second copper bull market in the 21st century. In an interview for CNBC, Citi's global head of commodities, Max Layton, projected that the base-case scenario would see prices reaching $12,000 per ton by 2026.
He acknowledges the possibility of even higher prices during a strong cyclical recovery. Meanwhile, Bank of America set its 2024 target price to $9,321, citing copper’s critical role in the energy transition and potential supply shortfalls.
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Despite copper’s impressive rally, not everyone is convinced that prices will maintain these highs. Gu Yan, director of copper at Citic Metal Co., issued a warning at an industry conference in Hangzhou, as reported by Bloomberg.
“Demand from fabricators is very weak after the recent rally. There is only a bit of demand from the renewable energy sector, not much from any other markets. Fabricators are all waiting for a price correction to get a breather,” he said.
Despite the potential for fluctuation, some companies are capitalizing on rising copper prices. A major miner, Anglo American NGLOY, reported an 11% increase in copper output for the first quarter of the year, largely due to its Quellaveco mine in Peru achieving its highest throughput rate.
However, Anglo maintained its production guidance for the year, acknowledging that copper grades may temporarily decline in the first half of the year, with increased output expected in the second half. The company's decision to cut capex by $1.8 billion and decrease production by 4% in 2024 and 3% in 2025 is seen as one of the tightening supply catalysts, alongside the shutdown of First Quantum's Cobre Panama mine.
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