Copper to rise towards $10,750 behind subdued supply growth – ANZ

Copper prices have surged in recent months and are now on the verge of hitting a record high, as optimism over the economic recovery continues. However, mine supply is struggling with both short and long-term challenges. Subsequently, strategists at ANZ Bank forecast copper prices to reach the $10,750 level.

See: Copper set to reach a new record high before the end of Q2 – OCBC

A lack of growth in supply is further tightening the copper market

“Government stimulus measures and rising investment in new energy sectors is expected to drive growth in copper demand in coming years. However, supply-side issues are also contributing to market tightness.”

“The current pipeline of projects likely to start producing in the next few years represents only 2.3% of forecast mine supply. This is well down on previous cycles, including 2010-13 when it reached 12%. Projected capital expenditure is suffering as a consequence. Total capex for expansions in 2021 is expected to be only slightly higher than last year’s level of $15.2 B. This subdued level of growth in supply should keep the copper market tight over the next couple of years.”  

“We have raised our short-term target to $10,750/t. This would be a record high. Further gains will rely on continued investment in infrastructure supporting the new energy sector. A strong rises in electric vehicles will also be a prerequisite.”