UBS predicts copper prices amid supply issues By Investing.com
© Reuters. UBS predicts copper prices amid supply issues
Copper prices continue to hover above $8,200/metric ton (mt), defying weak investor sentiment in China, and a series of mine supply downgrades have analysts predicting a sustained market deficit in 2024.
Analysts at UBS forecast a target of $9,500 per tonne and recommended investors seize the opportunity to buy when the market falls. Alternatively, we suggest taking advantage of the relatively low options market volatility to capture upside for copper.
A major factor contributing to the copper story has been the continued correction in supply growth. Prominent copper producers such as Anglo American (JO:) and First Quantum (NASDAQ:) have lowered their 2024 production guidance, signaling difficulties in expanding production. The recent plunge in processing costs reflects tighter market concentration and a potential decline in refining supplies. Analysts at UBS are targeting 3.5% global refining supply growth in 2024, raising concerns as global exchange inventory build-ups fall short of seasonal norms.
Despite weak demand from traditional sectors in the U.S. and weakness in Europe, robust demand from China in 2023 was instrumental in offsetting these challenges. Global decarbonization efforts are expected to drive electricity network and transportation demand for copper. The construction and home appliance sectors may face headwinds due to China’s easing of construction completions, but the ongoing economic stimulus package in China is expected to provide fundamental support.
Analysts at UBS forecast global copper consumption will rise 3.3% in 2024 as a potential manufacturing recovery in Europe and the United States helps overcome inventory clearance issues. With visible copper stocks limited, prices are expected to surge to more than $9,500 per tonne by the end of 2024, according to a UBS forecast.
