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Copper market outlook: Surge in prices and future projections

copper market analysis, forex trading

In recent weeks, the price of copper has surged, reaching heights of $9,580 per ton. This level is just shy of the psychologically significant $9,600 threshold. Market analysts, including those from prominent institutions like Bank of America, predict even higher prices in the near future. They suggest that the price of copper could not only surpass the $10,000 mark but could escalate further to approximately $10,250 per ton. Such forecasts are based on the current dynamics observed in the market, reflecting an upward trend that shows no signs of abating.

Copper prices have continued their upward trajectory throughout the year, currently priced at around $9,380 per ton—an increase of more than 10% since the start of the year. This rise is reportedly due to a previously predicted supply crisis that has now materialized, according to strategists at Bank of America and reported by MarketWatch. The shortage is due to a combination of constrained copper supply and escalating demand for applications in renewable energy technologies such as energy cables, electric vehicles, wind turbines, and solar parks. These sectors are integral to the ongoing global energy transformation, a movement in which copper plays a crucial role, as highlighted by CNBC. Bank of America notes that copper is central to the energy transition, with a noticeable lack of growth in supply from mining activities becoming increasingly evident.

In China, the availability of copper concentrates is becoming increasingly scarce, which in turn is limiting production capabilities at local smelters and refineries. This restriction is likely to push consumers of refined metal to seek alternatives on international markets. Analysts from Bank of America, as reported by CNBC, have noted this trend. They also foresee an increase in demand in Western markets such as the United States and Europe, as their economies begin to rebound. This resurgence, combined with the growing demand driven by the energy transition, is expected to lead to a copper market deficit later this year. Such a scenario underscores the tight interplay between supply constraints and burgeoning global demand.

The persistent lack of new copper mining projects is increasingly becoming a major concern for the industry. This issue, coupled with substantial investments in green technologies and a general recovery in the global economy, is poised to drive copper prices even higher. According to forecasts cited by MarketWatch from strategists at Bank of America led by Michael Widmer, prices are expected to reach $10,250 per ton ($4.65 per pound) by the fourth quarter of this year. This projection highlights the crucial role of copper in both technological advancements and economic growth.

The analysts at Bank of America also maintain a positive outlook on other precious metals like gold and silver. They predict that the price of gold will average around $2,500 per ounce by the end of the fourth quarter, with potential to climb to $3,000 per ounce by 2025. The strong demand from central banks and Chinese retail buyers is a significant driving force behind this bullish outlook. Furthermore, if Western investors increase their gold purchases, possibly spurred by lower interest rates, the price of gold could rise even further. An improvement in economic sentiment in China could shift some investments away from gold, suggesting a dynamic and interconnected global market for precious metals.



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