Goldman Sachs has revised its commodities and particularly the copper projection from $10,000/tone to $12,000, reflecting the increasing trend towards scarcity in the copper market in 2024, particularly in the concentrate segment. With no immediate solution in sight for near-term mine supply, the market may resort to demand rationing to maintain functionality.
Although the metal market has yet to reflect this upstream constraint, Goldman Sachs anticipates an unavoidable deficit path due to the mounting pressure on refined supply against robust end demand. Short-term responses in the midstream, such as in scrap and semis, have emerged in response to the rising price signal on the London Metal Exchange (LME).
However, these are considered temporary measures that will diminish as economies rebalance and inventories decline. According to Goldman Sachs’ latest supply-demand forecasts, there will be a 454kt metal deficit this year, up from 428kt in the previous year, and a 467kt metal shortfall in 2025, up from 413kt previously. With the seasonal surplus phase concluded, Goldman Sachs predicts that deficit accumulation will accelerate into the mid-year, particularly in the second half of the year.
Increasing Copper Demand
Some of the sectors which will increase the demand for copper are the electric car infrastructure and Automation, which are all undergoing rapid expansion. According to commodity broker Trafigura, this trend is anticipated to increase copper consumption by at least 10 million metric tonnes over the next decade.
Technological breakthroughs such as automation and the energy shift to electric vehicles and renewable energy sources, as well as artificial intelligence, are major drivers of this increase in demand. These innovations have increased demand for copper wires, which are used to conduct energy.
Limited Copper Supply
So, copper plays a central role in the green energy transformation, making the lack of mine supply expansion a significant concern. Australian mining giant BHP is making substantial investments in a this sector with a focus on Anglo American’s copper mines. Despite the rejection of its £31 billion deal for Anglo American on a previous offer, BHP, the world’s largest mining company, is contemplating an improved offer.
