Copper price soars even as gloomy forecast for the future

Copper once again approached the crucial $10,000-per-ton level on Tuesday amid bullish sentiment and renewed supply concerns in the world’s most important producing region.

Copper’s rally, which has more than doubled in price from its all-time lows, has been fueled by a widespread belief that demand for the benchmark metal will receive a massive boost, not only from post-pandemic economic stimulus, but also from a worldwide push for decarbonization.

Everything to do with the green energy transition requires more copper, particularly the electrification of the global vehicle fleet and massive investments in power grids, renewable energy infrastructure and storage.

While nearly everyone agrees that copper’s long-term future is bright, there is much less consensus on how bright the metal’s price will shine in the coming years.

A monthly survey shows large disparities in price forecasts from investment banks, brokers, economists and governments in the survey compiled April 13-18.

The lowest forecast among more than two dozen participants for the average price in the fourth quarter of this year is from BMO Capital Markets, which predicts copper will retreat to the $7,000-a-ton level.

Other notable bears are JP Morgan, Societe Generale, BBVA and Capital Economics who also see the price in the $7,000 range with further declines in 2022.

This is a big gap from the most bullish forecaster, Goldman Sachs sees average prices of $10,620 per tonne in the fourth quarter. Goldman, the number one proponent of the existence of a supercycle in commodities, sees more gains in 2022, expecting prices to reach $12,250 by the end of next year.

Only ABN Amro, Citi and ANZ see copper above $9,000 in the fourth quarter, but aside from ABN, they also see a pullback below that level a year later.

The consensus forecast for the fourth quarter average is $8,340, to slip to $8,130 in the fourth quarter of 2022.