Copper Prices Forecast Increased Due to Supply Tightness and Strong Demand

UBS has revised its copper price forecast, citing ongoing supply issues and strong demand as primary factors. The firm observed that a recent dip in copper prices followed a considerable rally, which was driven by a short squeeze in the U.S. and tight supplies of copper concentrate.

The price disparity between the COMEX and the London Metal Exchange (LME) is viewed as a positive factor for LME prices amid market stabilization. The market has faced tightening conditions since the fourth quarter of 2023, largely due to the shutdowns at the Cobre Panama mine and lowered output forecasts from several producers.

Additionally, it’s anticipated that Chinese copper smelters will accelerate their maintenance schedules, potentially further limiting near-term refined copper production. UBS has modified its projected increase in refined copper supply for this year to 2.1%, down from an earlier estimate of 3.5%. For 2025, a 3.3% increase is expected.

Demand for copper in China remains robust, driven by the country’s energy transition initiatives. Stimulus measures are likely to support ongoing growth in copper demand, with potential recoveries in manufacturing in Europe and the U.S. also contributing to this trend.

UBS forecasts a 3% increase in global copper consumption for this year, slightly revised from the previous 3.3% estimate, with consumption growth expected to reach 3.3% in 2025.

Based on updated supply and demand projections, UBS anticipates a copper deficit of 390,000 tons in 2024, a significant increase from the prior estimate of a 73,000-ton deficit. For 2025, the projected deficit is also estimated at 391,000 tons. Reflecting these updated dynamics, UBS has raised its copper price forecast by $1,000 to $1,500 per metric ton across various timeframes.