Soaring copper prices are driving market optimism with analysts predicting further price increases. Goldman Sachs is forecasting a 40% increase by mid-2025. Euronews Business looks at the stocks which could benefit.
ADVERTISEMENTDubbed "Dr Copper" for its predictive ability to diagnose the health of the global economy, copper has become increasingly central to both industrial progress and the transition toward electrification and sustainability, thanks to its use in electric vehicles, wind, solar energy and power grids.
With the world pivoting to a more environmentally friendly future, the dynamics of copper's supply and demand have led to a notable resurgence in its value. Since mid-February, the price of copper has ascended to its highest point in nearly a year, only to experience a slight retreat in recent sessions.
This rising trajectory in copper prices has been primarily driven by a tightening of supply, marked by reduced output from unprofitable Chinese smelters and a worrisome depletion of global reserves.
However, the prospect of a demand resurgence, particularly with China—the world's foremost copper consumer—on the mend, combined with the global shift towards more accommodative monetary policies by major central banks, could create an ideal mix for potentially witnessing an even more pronounced ascent in copper prices.
These developments have prompted a wave of financial experts adjusting their lenses to a rosier picture of copper's market trajectory.
Analyst perspectives on copper trends
"Copper’s march toward $9.000 (€8.300) a tonne therefore catches the eye, especially as it comes at a time of ongoing concern over demand from China, the world’s second-largest economy," Russ Mould of AJ Bell noted.
Ewa Manthey, a commodities strategist at ING, has an optimistic outlook on copper, suggesting the metal's prospects are shining despite some persisting short-term demand issues. This positive sentiment is buoyed by the anticipated shift of the Federal Reserve's rate policies. Despite a downturn in China's property market still weighing on demand, ING predicts a rise in LME Copper prices to $9.000 (€8.300) per tonne by the year's end.
Morgan Stanley Research's commodities analyst Amy Gower anticipates that "copper disruption is likely to result in a deficit, rather than surplus," for the upcoming years.
"Investors may look to equity opportunities, and specifically miners with strong prospects for volume growth and operational improvement," the expert said.
Goldman Sachs notes a historic tightness in global copper inventories relative to global demand. This is a key factor in their bullish outlook for copper, foreseeing a 40% price increase over the next 12 months, especially in the second half of this year as scarcity becomes more acute.
Goldman Sachs analyst Nicholas Snowdon highlights that higher prices are likely to be necessary to balance the market due to structural supply under investment, peaking next year.
Consequently, Goldman Sachs envisions a copper price surge to $10,000 (€9.250) per tonne by the end of this year and $12.000 (€11.100) per tonne by the end of the first quarter of 2025 as supply pressures intensify.
European companies in the spotlight
The surge in copper prices spells good news for European mining giants with significant stakes in copper production.
Rio Tinto Group, Glencore, Anglo American plc, Antofagasta plc, and Boliden AB stand out as the largest Europe-based companies in this sector.
Particularly, Antofagasta and Glencore exhibit a strong correlation with copper prices, suggesting a higher potential for share price gains in response to the metal's market movements.
Recent stock performance of these companies has been noteworthy. Antofagasta's shares have soared to record highs last Friday, boasting an 18% increase year to date, with March witnessing a 9% rise alone. Glencore's shares have also seen a remarkable 14% uptick in March, setting the pace for its fifth consecutive week of gains and marking its strongest monthly performance since February 2022.
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