Copper Price Forecast: What to Expect From One of the Most Consumed and Versatile Metals?

Common Applications of Copper: Demand by Industry

Copper is one of the most widely used industrial metals due to its high ductility, malleability, thermal and electrical conductivity and corrosion resistance. Examples of common uses:

• Electrical wires and cables
• Construction materials, plumbing and industrial machinery 
• Emerging and green technologies (electric vehicles and solar cells)
• Decorative elements, jewellery. 

The building construction industry currently shows the highest demand for copper. The charts below are based on averaged data but take into account that the uses of copper may vary slightly depending on the country.

Electric and electronic products, transportation equipment and consumer products together account for 46% of copper demand.

Copper can be alloyed with different metals, which expands its possible uses. Some of the most commonly used alloys are:

• Bronze (copper + tin) - structural and design elements, musical instruments, electrical contacts, ship propellers
• Brass (copper + zinc) - pipes and tubes, weather-stripping pieces, screws, musical instruments, cartridge casings for firearms
• Cupronickel (copper + nickel) - numerous uses in marine engineering, coinage
• Sterling silver (copper + nickel) - jewellery and other metalwork

What Factors Determine Copper Prices?

Here are some of the factors that affect and contribute to copper's overall price (to a greater or lesser degree):

• Demand. When economies are booming and expanding, the rising demand provides a nice boost to the price.
• Supply. Price usually soars when there's a shortage of readily available copper. 
• Stockpiles. Governments can use existing stockpiles as a short-term solution to pricing pressures. This helps keep prices at bay as long as the copper supply catches up eventually. 
• International relations. Financial crises, economic downturns, armed conflicts, sanctions and monetary policies can all have a significant effect if these events take place in major exporting countries.
• Technological innovation. Copper has an indispensable role in modern technologies, ensuring copper stays valuable.

Copper Demand Forecast by Sectors

The copper demand is expected to rise further because of growing concerns over low copper inventories. Demand can rise due to copper's vital role in a number of rapidly growing industrial sectors: Electric vehicle batteries and semiconductor wiring. Here are market projections for these two sectors to have a general idea of how much the consumption might grow. 

ACC also reports an expected 15.3-fold increase in copper demand for battery pack materials in 2031 compared to 2020. 

To support the ever-rising demand, there needs to be plenty of supply and effective export capabilities in producing countries. The region around Chile and Peru accounts for almost 40% of the world's copper production, with Australia also being in the top 3. Here are the last estimated reserves worldwide. 

In the latest commodity outlook, Australian mining giant BHP said that in-development projects in the 2022-2024 window could move copper prices higher.

Reuters reported copper price analysis forecasts for 2022, sharing that Commerzbank analysts expected the price per tonne to average at $9,400, while Bank of America said copper would average $9,813. ED&F has a similarly optimistic outlook, putting copper prices between $9,315 and $9,880 by the end of the year.

But not everyone has the same view. Wallet Investor expects a lower closing price of $5,034 at the end of the year.

Another copper price prediction for 2022 comes from Gov Capital, where the year-end price is expected to be in the $4,440-$6,007 range.

Technical Analysis of Copper Prices

There are three key steps to conducting technical analysis: 

Step 1. Identify the prevailing trend, which you can do by looking at the price chart on your chosen timeframe. 

Step 2. Mark support and resistance levels (drawn on 11 April 2022):

• S3: 4,457
• S2: 4,565
• S1: 4,645
• Pivot Point: 4,752
• R1: 4.832
• R2: 4,940
• R3: 5,020

Step 3. Establish entry and exit points. For this, look at technical indicators and determine an adequate moment for a move.

Source: Investing.com

Let's look at the signals picked up by technical indicators (as of 11 April 2022):

• RSI - Buy
• STOCH - Neutral
• STOCHRSI - Sell
• MACD - Buy
• ADX - Buy
• Williams %R - Buy
• CCI - Buy
• ATR - High Volatility
• Highs/Lows - Neutral
• Ultimate Oscillator - Buy
• ROC - Buy
• Bull/Bear Power - Buy

Summary: Strong Buy

Here are signals from moving averages (as of 11 April 2022):

• MA5: Simple - Sell; Exponential - Buy
• MA10: Simple - Buy; Exponential - Buy
• MA20: Simple - Buy; Exponential - Buy
• MA50: Simple - Buy; Exponential - Buy
• MA100: Simple - Buy; Exponential - Buy
• MA200: Simple - Buy; Exponential - Buy

Summary: Strong Buy

Copper Price Prediction for 2023-2024

The next stop is Wallet Investor's prediction for 2023. The mid-year closing price might be $5,347, and the end-year closing price might be $5,629.

Gov Capital expects the average price in the middle of the year to be $7,139-$7,300, and reach $7,560 by the end of the year. 

Moving on to 2024, Wallet Investor predicts the price to rise to around $5,907-$5,944 by the middle of the year and $6,144-$6,242 by the end of the year.

Gov Capital expects copper to break above $10,000 in April 2024 and close the year with an average price of $10,442. 

Long-Term Copper Price Forecast for 2025-2030 

CNBC reported the outlook of Bank of America, which expects prices to hit $20,000 per metric ton by 2025 due to widening supply and demand deficits.

And once again, Wallet Investor is much more reserved in its outlook.

Gov Capital expects a more eventful year for copper. In April, it may surpass $13,000, and in December, it may rise close to $14,000.

In the base scenario by Oroco Resource Corp, the forecasted price of copper in 2030 will be $10,756. In the bullish scenario, it's $14,341. The bullish assumption is supported by Rystad Energy, which believes global demand for copper will outstrip supply by more than six million tonnes by 2030.

Please bear in mind the copper price forecast for the long term is based on historical performance, which provides only approximate estimations. 

Copper Price History Over the Past 15 Years

The biggest dip in recent copper price history happened in late 2008. In a matter of 6 months, the price dropped from $3,963 to $1,305 per tonne. After that, the copper market went into a long uptrend until mid-2010, when the long-term trend declined until 2016.

Another big dip took place in March 2020, which correlated with the stock market crash and the beginning of the COVID-19 recession. In 2022, copper prices went up over fears of supply chain disruptions.

Are Copper Companies' Stocks a Buy or a Sell Now?

Leading publicly-traded copper miners worldwide by production output are:

• Glencore (LON: GLEN): Buy - 7
• Freeport-McMoRan (NYSE: FCX): Buy - 1, Overweight - 1, Hold - 6, Sell - 1
• BHP (NYSE: BHP): Buy - 8, Overweight - 2, Hold - 13, Underweight - 2, Sell - 1

As you can see, some analysts see potential in mining companies, and some are undecided. But these are just examples of the biggest producers. There are many more that you can analyse and view as a potential investment. Make sure to do thorough research on each one you're considering.

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Disclaimer: This article contains information gathered from multiple data sources and does not guarantee its accuracy or completeness. Before making any trading/investing decision, do your own research and consider your personal circumstances, investment experience, and current financial situation.