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Copper is one of the most versatile and essential metals in today’s world. With applications ranging from electrical wiring to renewable energy infrastructure, its demand remains robust. But what does the future hold for copper prices?
We will draw on insights from our in-house experts (Boris Mikanikrezai and Andrew Cole) when exploring the current global picture. We will provide a copper price forecast for 2024 and a long-term outlook for 2025.
As we navigate through 2024, the copper market presents a complex global picture, influenced by varying economic climates in major regions such as the US, China and Europe.
In the United States, the price of copper remains stable yet subdued, largely due to the seasonal summer lull, with premiums holding steady in the Midwest. Despite challenges, long-term optimism prevails, buoyed by potential supply imbalances and increasing demand for copper in green energy projects.
China, a major player in the copper market, witnessed a mild recovery in its physical market during August 2024. The copper grade A cathode premium in Shanghai saw an uptick, reflecting improved market conditions. This recovery is driven by expectations for better import arbitrage conditions post-LME price decline, although challenges remain due to fluctuating prices.
In Europe, the copper market remains weak, particularly in Germany – Europe’s largest consumer. Despite some demand from green energy projects, overall market conditions are bearish, with ample stock levels and sluggish performance in the manufacturing, automotive and construction sectors.
For more information on our long-term price analysis of the global copper market, see Fastmarkets’ copper 10-year long-term forecast.
In Q4 2024, copper prices are expected to experience upward pressure, driven by a more favorable macroeconomic sentiment (Federal Reserve rate cuts, stimulus in China), tighter market fundamentals (on expectations for smelter production cuts, a recovery in physical demand in China), positive seasonality (the fourth quarter typically being the strongest) and speculative positioning (rapid rebuilding of long positions). Given these factors, Fastmarkets analysts view the risk-reward profile skewed to the upside for the fourth quarter.
In China, the Shanghai premium should continue its recovery in the final quarter of the year, largely due to the improved sentiment following the substantial stimulus measures implemented by the country’s authorities.
In the US, spot market activity is projected to remain stable until the year-end, although supply availability could become a little tighter. Meanwhile, Europe might also see quiet spot activity until the remainder of the year, as most consumers are adequately covered by long-term contracts.
China’s stimulus package, announced in September, represents a significant injection of liquidity totaling 3.95 trillion yuan ($560 billion), equivalent to over 3% of China’s GDP. The size of this package is substantial, nearing the level of support provided during the Covid-19 crisis. Alongside the Federal Reserve’s recent rate cuts, this should increase liquidity in the financial system in the coming months. Speculators have already begun to re-engage on the long side of the copper market in response. Given that the fourth quarter is historically the strongest for copper, we expect prices to average around $10,265 per tonne in Q4 2024, which would mark a record high.
Lower trading volumes and potential market volatility suggest caution. Despite the expected rise, the market remains sensitive to macroeconomic conditions and geopolitical events. Investors should keep an eye on these factors as they could impact short-term price movements.
The video below shows the relationship between global refined copper supply and demand, from 2022 through 2025.
Beyond the immediate future, the copper market and the price of copper is poised for a bullish long-term trajectory, driven by the energy transition’s escalating demand. For instance, by 2025 the copper grade A cathode premium in Rotterdam is projected to rise by approximately 25%, reflecting tighter regional fundamentals and a recovering European market.
Fastmarkets’ copper long-term outlook remains optimistic. As we move toward 2034, refined copper consumption is set to be driven significantly by sectors linked to the energy transition, including electric vehicles and renewable energy applications. The anticipated structural supply deficit will likely necessitate increased investments in production facilities, further underpinning a bullish outlook for copper prices.
As mentioned, refined copper consumption will be supported by demand from sectors linked to the energy transition. Some of its uses are listed below:∙ To help connect batteries to electric vehicle (EV) powertrains∙ For use in electric motors in the EV charging infrastructure∙ Solar energy and wind power applications∙ Grid connections
We expect total apparent demand for copper to rise at a compound annual growth rate (CAGR) of 2.6% in the decade to 2034. Copper consumption from energy transition sectors should grow at a CAGR of 10.7%, including 14.3% for the EV sector, 5.6% for the solar power industry and 9.3% in wind power applications. Traditional non-energy transition sectors should see a growth rate of 1.4%.
The US copper market is expected to see a modest increase in demand, driven by government infrastructure projects and a growing emphasis on renewable energy. The supply-demand balance is likely to tighten, supporting higher copper prices.
China remains a critical player in the global copper market. The country’s focus on green energy and electric vehicles will drive significant demand. We project the Shanghai premium will average approximately $27 per tonne in 2025, reflecting a 25% decline from the estimated 2024 average. However, the long-term outlook remains positive, with expected stabilization and growth.
The forecast for copper prices in the next 12 months is bullish. However, there are key risks to monitor, including a potential US economic recession and increased trade protectionism. The long-term forecast is also very constructive, driven by robust demand from the energy transition sectors and constrained supply dynamics.
Economists, analysts and investors should keep an eye on macroeconomic conditions, geopolitical events and industry-specific developments that could impact copper prices.
For more detailed insights and a comprehensive analysis, consider exploring Fastmarkets’ copper 10-year long-term forecast.