BMI, the research arm of Fitch Solutions, has released a forecast indicating a monumental surge of more than 75% in global copper prices within the next two years. This surge is attributed to anticipated disruptions in supply and demand dynamics, largely influenced by the global push towards renewable energy adoption.
According to BMI’s report, the surge in copper demand stems from the accelerated transition towards green energy practices. The potential depreciation of the US dollar in the latter half of 2024 also contributes significantly to the expected rise in copper prices.
The anticipation of interest rate cuts by the Federal Reserve (Fed) this year is projected to weaken the US dollar, thereby making copper, priced in dollars, comparatively cheaper and more appealing to investors dealing in other currencies.
At Bank of America Securities, the Head of Copper Market Analysis noted, “Macroeconomic factors, such as potential interest rate cuts by the Fed and a weakened dollar, have instilled optimism among investors regarding copper price outlooks.”
Analysts at Citibank highlighted the recent momentum gained at the 28th United Nations Climate Change Conference (COP28) held in Dubai, where over 60 countries endorsed plans to significantly escalate renewable energy usage by 2030. This initiative is poised to substantially elevate copper demand.
In a December 2023 report, Citibank projected that the heightened renewable energy target could amplify copper demand by up to 4.2 million tonnes by 2030. Additionally, this surge in demand is anticipated to propel copper prices beyond $15,000 per ton by 2025, surpassing the previous record of $10,730 per ton set in March 2023.
These predictions hinge on the assumption of a gradual or soft landing for the US and European economies, alongside a swift global economic recovery. The prospect of an expanding economy is anticipated to fuel the demand for copper, a vital component in electronic devices and industrial machinery manufacturing processes.