Driven by both macroeconomic and market fundamentals, copper prices are expected to reach a record high in the fourth quarter of 2024. Analysts predict that the average copper price this year will reach $10,265 per ton, while Citibank expects prices to break through $10,500/ton in the short term and remain around $9,500/ton in the fourth quarter.
The main drivers of copper price increases are twofold: first, the potential interest rate cut by the Federal Reserve, which will provide more liquidity support to global markets. Secondly, the Chinese government's large-scale economic stimulus plan is expected to boost demand for commodities, particularly strong demand for copper in China’s spot market, which will further tighten market supply.
Seasonal factors will also boost copper prices in the fourth quarter. Historical data shows that the fourth quarter is usually the strongest period for copper prices, partly due to production cuts by smelters and a strong recovery in demand. In addition, the inflow of speculative funds has supported copper prices, and the market remains optimistic about the long-term demand outlook for copper.
Notably, global energy transition is increasingly driving copper demand, especially in electric vehicles, solar, and wind energy sectors, with these green energy projects expected to spur rapid copper demand growth in the coming years. According to analyses, by 2034, global copper demand will grow at a compound annual growth rate (CAGR) of 2.6%, with demand growth in the new energy sector reaching as high as 10.7%.
Despite weak copper demand in the European market, particularly with Germany facing sluggish demand in both manufacturing and construction sectors, analysts remain optimistic about the long-term outlook. It is expected that as supply tightens and demand recovers, the premium for Grade A cathode copper in Europe will rise by 25% in 2025.
Overall, with the implementation of global economic stimulus policies and the continued advancement of energy transition projects, the potential for copper price increases in the coming years remains significant, and the expectation of record-high copper prices in the fourth quarter is growing stronger.
