Bank of America Lowers Copper and Lithium Price Forecasts Amid Market Uncertainties
Bank of America (BofA) has revised its copper and lithium price forecasts for 2025, pointing to economic uncertainties and trade tensions that could weigh on procyclical commodities. The bank has lowered its 2025 copper price projection by 12%, from $4.88 per pound to $4.28, and its 2026 forecast by 20%, from $5.44 to $4.88. These changes reflect concerns about the ongoing U.S.-China trade dispute and its potential effects on cyclical metals.
BofA highlighted challenges in the copper concentrates market, including smelter overcapacity and limited mine supply. The gradual depletion of mining project pipelines has constrained ore availability, and significant investment in smelting capacity has driven global smelter utilization rates below 70%. While global copper production rose by 0.3% in 2024 and is expected to increase by 1.2% in 2025, refining surpluses are unlikely in the short term. Despite these constraints, demand from the energy transition and increased activity in the U.S. and China is expected to push the copper market into a deficit. China's reduced reliance on U.S. demand has also lessened copper’s sensitivity to trade conflicts. Additionally, the energy sector’s growth requirements—with power generation needing to expand 5% to 7% annually to sustain a 4% GDP growth rate—are expected to support metals demand.
In the lithium market, BofA projects a decline in prices due to new supply entering the market. The price of lithium carbonate is forecast to drop by 2.4%, from $10,250 per ton to $10,000 in 2025, while lithium hydroxide prices are expected to decrease by 10.6%, from $10,625 per ton to $9,500. Global lithium production grew by 33.6% in 2024 and is expected to rise by 27.3% in 2025. However, demand growth, while strong, is slowing slightly, with a 29% increase in 2024 and a projected 26% in 2025. Electric vehicle (EV) manufacturers are increasingly replacing lead-acid batteries with lithium-ion batteries, particularly in China, where EVs now account for nearly 35% of automobile production. Lithium-ion batteries are also gaining traction in China’s electric bicycle market, comprising one-third of new bicycles and 14% of the 350 million bicycles in circulation.
BofA predicts that 2025 will mark a turning point for the lithium market, transitioning from surplus to potential deficits by 2027. Recent production cuts by lithium producers, driven by falling prices, are already beginning to impact projected surpluses.
Bank of America’s revised forecasts underscore the challenges facing the copper and lithium markets amid economic uncertainty and evolving supply-demand dynamics. While trade disputes and increased supply are putting downward pressure on prices, the long-term demand tied to the energy transition and technological advancements is expected to sustain the strategic importance of these critical commodities.
