copper weekly
Goldman Sachs has been unabashedly bullish copper this year and they've been rewarded by a strong copper rally so far in 2024.
They're now boosting their year-end forecast for LME copper to $12,000/ton, a 21% rise from current prices and they continue to see another 50% gain (on average) in 2025. Those forecasts would roughly correspond to $5.40/lb this year and $6.75 next year.
Here's what they wrote:
The copper market's path into scarcity has gathered momentum so far this year, with the concentrate segment - which sits just before the metal market-moving into extreme tightness. Lacking any near term mine supply solution, the only way to maintain concentrate market function will be via demand rationing. Whilst the metal market has yet to reflect that upstream tightness, we think the increasing bind on refined supply set against healthy end demand leads to an inevitable deficit path ahead. Short run midstream responses have emerged to the higher LME price signal - particularly in scrap and semis - but these are temporary responses which will abate as economics rebalance and respective inventories exhaust. Our latest supply demand estimates point a 454kt metal deficit for this year (vs 428kt deficit previously) and 467kt metal deficit for 2025 (vs. 413kt deficit previously). With the seasonal surplus phase now at an end, we expect deficit accumulation to build momentum into mid-year and particularly H2 this year. Given visible stocks stand at just over 600kt, the potential still persists for that metal tightening path in H2 this year to take the market to a stockout episode by Q4. Whilst we see a near term phase of price consolidation as most likely, given the physical market digests short term responses to the higher LME environment, this will be relatively brief. Given the larger deficits, we upgrade our year-end target on copper to $12,000/t from $10,000/t, whilst raising our full year forecast average price to $9,800/t (vs. $9,200 previously) and retain our average $15,000/t in 2025.
