Copper is being sighted as a critical component of a greener global economy. An increased demand for a construction-led global recovery coupled with high demand is outstripping supply.
This has led to a number of analysts forecasting a global shortage in the coming years and a significant upturn in the future price.
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In addition, markets are pricing a V-shaped recovery for 2021 based on:
- Rapid recovery in emerging markets, especially in Asia;
- Creation of COVID-19 vaccines;
- Election of a pro-trade US administration; and
- Growth of intra-regional trade in Asia.
One of the first executive orders signed by the Biden administration was to re-join the Paris Agreement. This points to a more copper-intensive future, as global economies now collectively look to a greener energy policy over the medium to longer term with the US back on board.
Prices are likely to continue to trend higher in 2021 suggesting the early stages of a significant long-term bull market. Goldman recently raised their 12-month forecast for copper to $9,500 per metric ton, up from a previous estimate of $7,500. The Wall Street banks say they now expect a sustained, higher average price for 2021 and 2022 .
About the author:
Over the past few years Dean Cunningham has been the orchestrator of a number of local and international transactions in the mining, downstream, energy and utility sectors. These are aligned with Micofin and its strategic partners’ (Wood, Practara, NEXUS Intertrade and Africa House) objectives to take skills, technology, and capital to Africa, with the goal being to create jobs and do the work on home soil.