Slowing Copper Mine Output Draws Crowd of Bullish Forecasts on Wall Street

Concerns regarding copper supply, relative to expectations for breakout demand from electrification, green energy, and generative AI, are generating bullish sentiment among forecasters. The prospect of declining interest rates is also adding fuel to the fire. Copper futures broke above $4.30/lb this morning, representing a double-digit percentage return in the year-to-date period.

The growth rate of copper mine output slowed significantly in 2023 and producers face headwinds in ramping up supply throughout the remainder of the decade – particularly in some of the leading copper exporting nations like Chile and Peru. Though talk of copper deficits is becoming more common, the year actually began with a monthly surplus in January, suggesting such forecasts may be too pessimistic in the near-term.

Related ETF: Global X Copper Miners ETF (COPX)

A wave of bullish copper projections is flowing down Wall Street. Per Bloomberg, Citi recently declared that copper has just entered its second secular bull market this century, citing potential for “explosive price upside” again over the next three years. Goldman Sachs previously forecast copper to be the top metallic beneficiary of potential interest rate cuts at the Federal Reserve, which should create an especially strong drag on rates at the shorter end of the yield curve. According to Reuters reporting, Goldman sees a Fed-driven -100bps decline in US 2-year rates driving an immediate 6% boost in copper prices.

MRP noted in mid-March that China’s top copper smelters, including Jiangxi Copper, Tongling Nonferrous Metals Group, Jinchuan Group, and China Copper, agreed to initiate joint production cuts at some loss-making plants that now face short supplies of copper concentrate. Bloomberg reported that smelter maintenance could also add some further tightness to the copper market, set to peak in April and May. Now that we are into the early portion of that period, copper futures’ have shifted to…