Copper Outlook

Headlines such as “copper is the new oil” (Goldman Sachs Commodities Research, 13 April 2021) are shedding light into the drivers shaping the copper market to a multi-year boom:

Strongest historical demand

  • Green metals (copper at the top of the list) will be critical to build a greener global economy
  • Sustainable energy sources (solar, wind, geothermal) will support a surge in copper demand
  • Green demand in this decade is expected to match and then surpass the demand on copper from China during the 2000s
  • The strongest growth in global copper demand in history is expected to occur in this decade

Supply challenges

  • The copper market is not prepared to meet the surge in expected demand
  • Legacy decade of underinvestment in the sector, very few greenfield projects in pipeline, capex resistance
  • Long lead time to establish new supply: bringing a greenfield project from successful exploration to start of production usually takes between 10 and 20 years

Multi-year boom market

  • A surge in demand and a limited supply response would trigger open-ended market deficits.
  • Copper prices either rise to incentivize a supply buildup to resolve potential deficits, or scarcity pricing may define the second half of this decade
  • Goldman Sachs believes a long-term copper price of $4.54/lb ($10,000/tonne) is the incentive price needed for new projects to come in line and solve deficits towards the end of this decade.

Goldman Sachs – Copper is the New Oil April 13 2021

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