Copper Prices Retreat from Record Highs Amid Weak Demand, Long-Term Outlook Remains Positive
After reaching a peak of $10,800 per tonne in May 2024, copper prices have fallen by 19% in recent months due to sluggish demand, particularly from China. Despite this downturn, the long-term outlook for copper remains optimistic, encouraging plans to increase production in the Democratic Republic of Congo (DRC) and Zambia.
BHP, the world's second-largest copper producer, announced at the end of August that the current surplus in the copper market is expected to persist and slightly increase in 2025. The company attributes this surplus in part to a sharp contraction in China’s housing sector, a key driver of copper consumption. Analysts have noted that the usual seasonal rise in industrial activity in China, which typically reduces raw material inventories, did not occur in 2024. Instead, inventories monitored by futures markets have risen significantly, pointing to a mismatch between supply and demand.
Goldman Sachs has also adjusted its copper price forecasts, citing China’s economic slowdown. The bank now predicts copper will trade at $10,100 per tonne in 2025, down from an earlier forecast of $15,000. Its $12,000 per tonne target for the end of 2024 has been postponed to post-2025.
Despite this short-term price volatility, the long-term outlook for copper producers remains strong. BHP has emphasized that global copper supply will struggle to keep up with demand in the latter half of the decade. According to the International Energy Agency, existing mines and upcoming projects will only meet 80% of global demand by 2030, suggesting a potential supply deficit.
Copper production in Africa, particularly in the DRC and Zambia, stands to benefit from this positive outlook. The DRC doubled its copper production to 2.8 million tonnes by 2023, driven by expansions at major mines like Kamoa-Kakula and new exploration efforts. The country accounted for 65% of the world’s newly identified copper reserves in 2023. Meanwhile, Zambia aims to increase its production to 3 million tonnes by 2031, up from 700,000 tonnes in 2023.
