Copper is the third most used metal in the world, and experts believe that the demand for this important raw material is set to grow in the coming years. At the same time, the supply situation is expected to tighten.
For this reason, market observers may wonder, “When will the price of copper rise? ” The general consensus is that, although prices may not spike out in the short term, they will rise once the market really starts to enter
a deficit.
Joe Mazumdar of Exploration Insights said via email: “Most analysts are forecasting increasing deficits in the copper market balance by 2027-2028, with a short-term forecast (2024-2026) suggesting surpluses until then; however, recent developments suggest a shift to deficits by the end of 2024 due to production shortages in large producers.”
Copper Price Trends
A deficit between demand and supply of copper triggered a record rally in 2021, bringing prices to an all-time high of 10,724.50 dollars per metric ton (MT) — a record that the metal broke in March 2022, when it reached 10,730 dollars.
However, with uncertain demand, copper failed to keep its level above $9,000. As a result, it started to slip, reaching $7,910 in early October 2023. Copper managed to close the year close to the 8,500 dollar mark
.
This trajectory continued in the first quarter of 2024, keeping copper in a trading range of between 8,000 and 8,500 dollars. Recent production restrictions at major Chinese copper smelters are also helping to support prices
.
Factors That Will Influence Upward Copper Prices
Demand for Green Energy Drives Copper Demand
The many useful properties of copper have resulted in demand from different industries. Construction and electronics have long been major drivers of copper demand, and with a conductivity rating second only to silver, it’s not surprising that copper is also an ideal metal for use in energy storage, electric vehicles (EVs), and EV charging infrastructure
.
Energy storage could prove to be one of the most copper-intensive markets of the 21st century. According to a 2022 report on The Future of Copper by S&P Global Market Intelligence, “The rapid and widespread deployment of these technologies globally, especially EV fleets, will generate a huge increase in demand
for copper.”
The report predicts that global demand for refined copper will almost double from 25 million MT in 2021 to about 49 million MT in 2035. Energy transition technologies are expected to account for about half of this growth in demand. “The world has never produced so much copper in such a short time,” the report points out.
The Copper Situation in China and Global Industry Trends
China is the world’s largest consumer of the metal, and it’s not surprising that its “zero COVID” policy has created problems for its economy and demand for copper. However, the repercussions continue to be felt in the country, especially in the real estate sector
.
Apart from the real estate sector, demand for copper from China is likely to receive a boost from the Chinese government’s commitment to invest in its infrastructure and in the green energy economy. This impetus is evident in the ongoing structural reforms aimed at ensuring the country’s role as a global economic power—these include the Made in China 2025 and China Standards 2035 initiatives. As part of the country’s fourteenth five-year plan, these policies target sectors heavily dependent on copper, such as 5G networks, robotics, electrical equipment, EVs, industrial internet, interurban transportation and rail systems, high-voltage power transmission, and EV charging
stations.
Ultimately, while copper continues to fluctuate between uncertain demand and supply restrictions, its position in the commodities market remains crucial. With multiple factors at play, from green energy developments to geopolitics, investors must be attentive to the nuances of the copper market to seize the opportunities that arise
.