Last Friday, analysts including Jason Fairclough from Bank of America Merrill Lynch released an industry report stating that copper prices are expected to rise to $12,000 per tonne by 2026, more than 20% higher than current levels.
According to the news app WiseMoney, on Friday, analysts including Jason Fairclough from Bank of America Merrill Lynch released an industry report, stating that copper prices are expected to rise to $12,000 per tonne by 2026, more than 20% higher than current levels, the closest prediction to Citigroup's. Goldman Sachs believes that copper prices are expected to reach this level earlier this year. Related concept stocks: Zijin Mining Group (02899), CMOC Group Limited (03993), MMG (01208), Jiangxi Copper (00358).
Bank of America Merrill Lynch's report pointed out that the demand for copper in the market is soaring due to the energy transformation, the growth of Indian demand, and the rise of the AI and data center construction. It is predicted that by 2026, the global supply-demand gap will double and reach 743,000 tons. Bank of America Merrill Lynch is bullish on copper mining companies, giving buy ratings to several giants, including Freeport-McMoRan, Antofagasta Mining, Ivanhoe Mines, Zijin Mining Group, and Jiangxi Copper. Attention should be paid to the high-quality copper assets hidden in integrated miners such as Teck Resources, Anglo American, and Glencore.
In addition, Citigroup believes that the second bull market for copper has just begun. The cyclical weakness of the past 18 months has suppressed the bull market, but now, this resistance is fading away. Citigroup also believes that the triggering factors of this bull market include the growth of decarbonization-related demand (especially wind power, grid, and electric vehicles) and the increasing demand for emerging AI/data centers.
The bank raised its short- and medium-term copper price forecasts and expects copper prices to rise to $9,700 per tonne in the short term (0-3 months) and reach $10,000 per tonne in the fourth quarter of 2024. By 2026, Citigroup expects copper prices to rise to $12,000 per tonne in the base scenario and $15,000 per tonne in the optimistic scenario.
Meanwhile, Goldman Sachs's report on May 3 pointed out that the supply of refined copper is becoming increasingly tight, while terminal demand continues to be robust, which may lead to a copper supply shortage in the future. Given the large supply-demand gap, Goldman Sachs raised its expected year-end price for copper from $10,000/tonne to $12,000/tonne, and its average price expectation for the year from $9,200/tonne to $9,800/tonne, maintaining its forecast of an average of $15,000/tonne in 2025.
Goldman Sachs pointed out that as the growth rate of copper mine supply slows down and smelting demand continues to be strong, the supply-demand gap may continue to widen. The report predicts that global copper mine supply will increase by 2% this year, lower than the mid-term forecast of 6% in the previous year and the growth rate of 3% in the previous year, reaching the weakest level since 2020. At the same time, the construction of AI data centers and related power infrastructure is creating new demand for copper. The copper density of AI data centers is expected to increase from 25 tonnes per MW to 40 tonnes, creating an average of 80,000 tonnes of copper demand this year.
In addition, the report also stated that the construction of AI data centers and related power infrastructure is creating new demand for copper. Copper will primarily be used for power distribution, grounding and connections, piping, and HVAC systems in data centers. Due to the significantly higher power density of AI data centers, the demand for copper is higher. The demand for copper in non-AI data centers has averaged 150,000 tonnes this decade, and is expected to increase slightly to an average of 180,000 tonnes in the next five years. However, the capital spending and higher copper demand of AI-related data centers will result in copper demand of 80,000 tonnes this year, doubling to 160,000 tonnes in 2026 and then stabilizing.
CITIC Securities pointed out that under the dual effects of production disturbances in the mining end and the expansion of production capacity in the smelting end, the spot TC of domestic copper concentrate has frequently hit new lows since 2011, showing a severe deviation from the long order guide price. The supply shortage in the copper industry chain may have gradually spread from the mining end to the smelting end, and potential smelting end production cuts may cause the global refined copper supply-demand balance to change from a slight surplus to a shortage within this year. We are optimistic about the configuration value of the copper sector under the backdrop of the continued evolution of supply shortage.
Related concept stocks:
Zijin Mining Group: In 2023, Zijin Mining Group produced 1.01 million tons of copper ore, up 11% year-on-year; 67.7 tons of gold ore, up 20% year-on-year; 467,000 tons of zinc (lead), up 3% year-on-year; and 412 tons of silver, up 4% year-on-year.
CMOC Group Limited: announces production and physical trading volume guidance for major products in 2024. The company's copper and cobalt output continues to grow rapidly. According to the guidelines, the company plans to produce 520,000-570,000 tons of copper and 60,000-70,000 tons of cobalt in 2024, an increase of more than 100,000 tons of copper capacity and 10,000 tons of cobalt capacity from 2023. In addition, the company plans to produce 12,000-15,000 tons of molybdenum, 6,500-7,500 tons of tungsten, 9,000-10,000 tons of niobium, and 1.05-1.25 million tons of phosphate fertilizer, and achieve a physical trading volume of 5-6 million tons, maintaining stability compared to 2023.
MMG: committed to exploring copper and zinc resources, a global leader in copper and zinc resources. The company has always been committed to the mining industry, mainly producing copper and zinc, as well as a small amount of gold, silver and other mineral resources. As a diversified basic metal company, MMG has four operating mines. Its largest shareholder is China Minmetals Hong Kong Holding Limited, and MMG is a central state-owned enterprise. The company's future revenue and profits will increase significantly as the Las Bambas copper mine resumes full operation.
Jiangxi Copper: owns the largest open-pit copper mine - Dexing Copper Mine - in China. In addition to Dexing Copper Mine, the company also has four wholly-owned controlling mines, including Yongping Copper Mine, Chengmenshan Copper Mine, Wushan Copper Mine, and Yinshan Copper Mine. The total copper resource reserves of the company's five major mines is 7.3 million tons, with an average remaining exploitable period of 37 years. The copper reserves of the company's five major mines account for approximately 21% of the national reserves.