Fitch Solutions expects copper prices to average around $US7500 per tonne (t) in the fourth quarter of 2022, but the long-term outlook is far rosier.
According to Markets Insider, copper was trading at $US7790.75 ($11,654)/t on September 16, which was down 15 per cent year-on-year.
In a recent report, Fitch revised its average 2022 copper price forecast from $US9470/t to $US8800/t. The base metal achieved a record high in March 2022, topping $US10,600/t following Russia’s invasion of Ukraine.
“Competing supply and demand factors have caused considerable volatility in 2022 so far,” Fitch said.
“After being driven to at an all-time high of $US10,674/t on March 4 by concerns about supply disruptions after Russia’s invasion of Ukraine, copper prices began to fall sharply in late April.”
Fitch said the declining price came as the global macroeconomic picture worsened and concerns grew about future demand from China in particular. Global inflation has been a particular disruption to industrial activity.
“A stronger US dollar has also capped demand for the commodity, which is traded in the currency internationally,” Fitch said.
Supply disruptions in Latin America have offered some support to copper prices, a dynamic Fitch expects to continue in the fourth quarter of 2022.
The financial services company expects copper prices to average $US8400/t in 2023, before edging higher to $US9100/t in 2024 and $US9400/t in 2025.
By 2031, Fitch believes copper prices could reach $US11,500/t “as a long-term structural deficit emerges” due to the “very strong” long-term demand outlook. Despite this, Fitch said there is a “significant pipeline” of new projects set to bring additional copper to market, particularly in Chile, Peru, Australia and Canada.
“From around 2026, however, these improvements in supply will be increasingly outpaced by demand growth from the global transition to a green economy,” Fitch said.
“Our Autos team forecasts global EV (electric vehicle) sales to increase 279 per cent from 2021 to 2031, and reaching 24.7 million units per year by the end of the forecast period.”