With the global energy transition and the rapid growth of demand for electric vehicles, copper, as one of the key raw materials, has attracted much market attention for its price prospects. Recently, the Chilean government predicts that copper prices will average US$4.20 per pound in 2024, a significant increase from the previous forecast of US$3.84 per pound. The forecast, announced by the technical director of the Chilean Copper Commission (Cochilco), shows optimism about the future copper market.
Patricia Gamboa, Cochilco’s head of research, said the committee’s upcoming review of its copper price forecast will be “considerable,” meaning the latest outlook will be much higher than previous forecasts. This adjustment is mainly based on tight supply and growing demand in the global copper market. In particular, the rapid rise of the electric vehicle industry has led to explosive growth in demand for copper, while the supply side faces many challenges, such as increased difficulty in mining and environmental policy restrictions.
Chilean Finance Minister Mario Marcel further emphasized the trend of rising copper prices in his speech to Congress. He said the rise in copper prices will not only continue this year, but will become more persistent in the coming years. This view has been widely recognized by the market, and investors have increased their investment in the copper market.
Citigroup analysts pointed out in a report that despite recent market cyclical uncertainty and weak spot demand indicators, investor confidence in the copper market remains firm. They believe that copper prices are expected to continue to rise in the coming period, given the shortages faced by copper supplies. The report predicts that copper prices are expected to rise to as high as $10,500 per pound in the near term.
Recently, the three-month copper price on the London Metal Exchange (LME) once rose to US$10,260 per ton, hitting its highest point since April 2022. Meanwhile, U.S. COMEX copper futures prices also hit highs, exceeding $5 per pound, equivalent to more than $11,000 per ton and more than $1,000 higher than the LME benchmark contract. This price difference mainly reflects strong growth in U.S. copper demand and active accumulation of speculative funds.
Copper producers and traders are rushing to ship more metal to the United States to take advantage of U.S. copper futures prices being higher than those in London. According to sources, relatively short shipping times from South America to the United States and lower financing costs have made the U.S. market a popular destination for copper trade.
Copper inventories in U.S. CME-registered warehouses have fallen 30% over the past month to 21,310 tons, indicating very strong end-user demand for copper. Meanwhile, copper inventories in LME-registered warehouses have also fallen by more than 15% since early April to 103,100 tons. These signs indicate tight supply and strong demand growth in the global copper market.
Overall, as the global energy transition and demand for electric vehicles continue to grow, the outlook for the copper market remains optimistic. The Chilean government’s upward revision of its copper price forecast and the increase in market confidence will further promote the rise in copper prices. Investors should pay close attention to market dynamics and seize investment opportunities.
Post time: May-22-2024
