Copper prices are expected to rise in the long term due to the clean energy transition, despite ongoing short-term concerns.
"In the short term, the upside to copper prices might be capped by macro drivers, including ongoing demand concerns in China and lingering uncertainty over US monetary policy," ING commodities strategist Ewa Manthey wrote in a March 18 note.
"However, micro-dynamics are starting to look more constructive for copper amid a tightening supply outlook. The demand side is expected to slowly improve this year, especially from the green energy sector," Manthey said.
Efforts to transition to cleaner energy have been a main driver for copper demand as the metal is used for electric vehicles, solar technology and wind turbines, Saxo Bank's Ole Hansen said in a March 19 note.
Hansen also flagged global economic conditions, monetary policy and weather as factors affecting copper price changes.
Manthey noted a potential market deficit for copper concentrates in 2024 due to supply setbacks. First Quantum Minerals Ltd.'s Cobre Panama copper mine, one of the largest copper mines in the world, was ordered by the Panama government to shut down in December 2023 due to the mine's environmental and social impact.
Cobre Panama accounted for 1.5% of global copper output as well as 2.5% of China's copper concentrate imports in 2023, according to the ING note.
The London Metal Exchange three-month copper price rose in March, reaching $9,089.00 per metric ton on March 18, as Chinese smelters announced plans to curtail production. The price then dipped through March 22, closing the week at $8,866.50/t.
"The latest rally pushing prices higher was fueled by Chinese smelters reaching a rare agreement to jointly cut production of refined metals to cope with shortages of raw material," Hansen said in a March 15 note. "We maintain our long-standing bullish stance on copper, and with copper miners also exhibiting signs of resurgence, the possibility of a fresh record high in the second half of the year appears achievable."
In an interview with S&P Global Commodity Insights at the CERAWeek by S&P Global conference in Houston, Trafigura Group Pte. Ltd.'s chief economist, Saad Rahim, highlighted the potential of copper demand to continuously rise in the foreseeable future as companies move to meet energy transition needs.
The US must focus on improving permitting to meet a potential copper supply shortage, Freeport-McMoRan Inc. CEO and Chairman Richard Adkerson said March 18 during the CERAWeek by S&P Global conference.
"If the US government really wants to build a copper business ... if they want to make a valuable copper business here, they need to stop just giving lip service to permitting," said Adkerson. "Everybody says we're going to do something, but they need to do something about it. They need to put more resources in it, make decisions quicker, coordinate the state governments because there are overlapping issues there.
