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Copper Price Forecast and Market Predictions

London Metal Exchange (LME) prices have climbed back above $7,250 (a four-year high) on fresh worries about possible supply disruptions. While these concerns are not unfounded, they are tied to the ongoing contract negotiations at Escondida and should be viewed as temporary. Even a worst-case strike scenario has production restored at some point in the third quarter. The closure of Vedanta’s Tuticorin smelter is also raising supply concerns even though the final disposition of the facility is far from certain.

Beyond these two events, fundamentals paint a more reassuring picture of the market for buyers. Visible inventory, including Shanghai bonded warehouse stocks, is higher than in December, Chinese imports are showing no growth, premiums are not moving higher in a worrisome way, and scrap discounts remain relatively wide, a sign of good supply for the secondary market. The US dollar has also appreciated since April, another headwind for a sustained rally in copper prices.

Looking forward, we see a balanced market for 2018, which suggests current prices above $7,200 cannot hold. Specifically, we would avoid purchases above $7,000 per metric ton and await a realignment of prices and fundamentals in the third quarter.

We have changed our view of 2019, however. We now see a modest deficit reemerging that points to support for higher prices. We have raised our forecast for next year accordingly and now have prices nearing $7,000 per metric ton by year’s end. This argues for locking in purchases later this year on any correction below $7,000 per metric ton.

To learn more, visit Commodity Coverage – Metals

Copper price analysis buy or sell

Copper Supply and Demand Forecast Highlights

  • Production growth slowed across 2017, but appears to have hit bottom in the fourth quarter. Although the market has fresh worries about possible supply disruptions, supply-side fundamentals remain good; we expect mine production to increase by more than 3% in 2018.
  • Consumption growth is around 3% 2018 in and slightly lower in 2019. Slower Chinese industrial production growth shapes this stable outlook.
  • London Metal Exchange (LME) prices have jumped above $7,200 on supply concerns. This is temporary. We have, however, raised the forecast on tighter fundamentals. We see prices near $7,000/metric ton at the end of 2019, $350 higher than previously forecast

copper consumption forecast and historical review

IHS Markit long term copper price forecast through 2020

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