Goldman Sachs raised its year-end copper price target from 10,000 US dollars per ton to 12,000 US dollars per ton, which means another 20% increase from the current price; Goldman Sachs also predicts that the average price of copper will rise to 15,000 US dollars in 2025.
Financial Services Association, May 7 (Editor Liu Rui) As the price of copper known as “Dr. Copper” broke through the 10,000 US dollar per ton mark, Goldman Sachs Group warned that the shortage pressure on copper mines is still increasing, and copper prices are expected to continue to soar.
Since the beginning of this year, with the resumption of global factory activity and tight copper supply, copper prices have risen by 17% cumulatively.
Recently, Goldman Sachs raised its year-end copper price target from 10,000 US dollars per ton to 12,000 US dollars per ton, which means that the price can rise by about 20% more than the current price. Goldman Sachs also predicts that the average price of copper will rise to $15,000 in 2025.
Copper shortages will continue to worsen
Nicholas Snowdon (Nicholas Snowdon), head of Goldman Sachs's industrial metals research team, and others wrote in the report: “We still predict that from 2024, the metal shortage will shift to an endless and increasing situation.”
They expect that by the fourth quarter of this year, there will likely be a copper “shortage event” — that is, copper stocks will drop to a very low level.
Goldman Sachs wrote in the report:
“Our latest supply and demand estimates show that this year's copper gap is 454 thousand tons (kt), compared to the previous forecast of 428 thousand tons; the copper gap for 2025 is 467 thousand tons, compared to the previous forecast of 413 thousand tons. As the seasonal surplus phase comes to an end, we expect copper shortages to continue into the middle of the year, particularly in the second half of this year. Given that copper stocks are only slightly above 600 thousand tons, the copper market is likely to be out of stock in the fourth quarter.”
Prospects for the Fed to cut interest rates “add fuel to the fire”
After the US released weak non-farm payrolls data last week, market speculations about when the Federal Reserve will cut interest rates this year are once again ahead of schedule. This has caused various metals to join the overall rise in risk assets. On Tuesday, copper prices rose 2.1%, returning above 10,000 US dollars.
Currently, the US swap market shows that the probability that the Fed will cut interest rates before the end of the year is 53%, up from about 40% at the end of April. If the Federal Reserve can relax its monetary policy, it is clearly conducive to a further increase in copper prices.
At the same time, as China continues to introduce economic revitalization measures, the financial market is also becoming more optimistic about China's economic prospects, which also makes people more confident about the prospects for copper demand.
Regarding the outlook for copper prices, Goldman Sachs said, “Since the spot market has absorbed the short-term reaction to LME's rise, we think copper prices are most likely to consolidate in the short term, but this will be relatively short. In view of the greater shortage of supply and demand, we raised the target price of copper from 10,000 US dollars/ton to 12,000 US dollars/ton at the same time as the annual average price forecast to 9,800 US dollars/ton (previously 9,200 US dollars/ton), and expect the average price of copper to be 15,000 US dollars/ton in 2025.
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