The price of copper hit almost a two-year high this week, and according to analysts at investment bank Citigroup (NYSE:C), this is a sign that the red metal has entered its second secular bull market of the century.
Table of Contents:
Concerns about the supply of copper
Over the past two months, copper has increased by more than 15.75 percent, fueled by disruptions in mining operations that have threatened the production of refined copper in China, a major global supplier.
Bank of America (NYSE:BAC) analysts also believe that the supply of copper is at risk, citing the lack of new mines. As a result, the company recently increased its price target for 2024 to $9,321 per metric ton (MT), compared to the previous forecast of
$8,625.
The impact on Supply and Demand
On the demand side, China’s economic recovery is fueling the fire. Positive signs such as a strong purchasing managers’ index and increased exports are fueling hopes for a new surge in Chinese copper demand
.
Mining Exploration Challenges Threaten Future Copper Supply
Concerns about the supply of copper are not a new problem: decades-old problems are at the root of the growing shortage.
The reduction in exploration spending has disproportionately affected junior mining companies. These companies, critical to the initial discovery, recorded an 8 percent drop in exploration spending in 2023
.
Forecasts and Future Prospects
The solid price fundamentals of copper have prompted analysts to forecast further increases in the coming months.
