RBC RBC Capital Markets analyst Sam Crittenden sees copper prices ahead of themselves but expects only a pause in a longer-term rally,
“After starting the year stuck in a range around $ 3 .75/lb, the dam finally burst in mid -March when Chinese smelters acknowledged they did not have enough concentrate and announced plans to reduce production (which hasn’t actually happened yet). Since then, copper is up 22 % to $ 4 .65/lb and recently made new all -time highs over $ 5.00/lb on the Comex exchange. We expect prices to remain elevated throughout this year and raise our 2024 estimate to $ 4 .39/lb from $ 4.25/lb (which implies ~ $ 4.70/lb for the balance of the year with the price averaging $ 4 .05/lb YTD) due to ongoing supply constraints and limited inventories ; however, our view is tempered by our expectations for improving supply into 2025 and tepid demand in China … We believe the energy transition including renewable energy, EVs and the associated grid improvements can drive strong demand for copper while the data center build out could also add a new layer of demand. This growing demand is set against an aging supply base without much new supply committed to come online post 2025 and it’s getting harder to build new mines due to rising costs and social issues. For this reason, we believe a period of higher prices is needed to spur investment in new copper mines and we have raised our price estimate from 2026 -2028 to $ 5.00/lb from $ 4.50/lb”
The analyst has outperform ratings on Teck Resources, Ivanhoe Mines, Capstone Mining, Hudbay Minerals and First Quantum.