Copper supply forecasts may be too optimistic, analysts at Jefferies believe.
In a note highlighting copper production growth, Jefferies believed that data indicates potential market deficits persisting until at least 2025.
Jefferies analysts have quantified copper production growth by tracking major miners representing around 70% of global copper supply. Their projections for 2023 indicate a potential 1% to 7% year-on-year increase in production, depending on various growth project scenarios.
The accelerated growth in supply is expected to slow down after the following year, coinciding with increased demand driven by the energy transition.
The report examines copper production guidance for the full year provided by companies in their database, projecting a 4% increase in copper production for 2023 compared to 2022.
Jefferies is bullish on copper's medium to long-term prospects due to rising global demand and limited supply growth.
Against this backdrop, Jefferies has highlighted four copper producers as well positioned for higher copper prices. According to analysts, companies like Freeport-McMoRan Inc (NYSE:FCX), First Quantum Minerals (TSX:FQM), Antofagasta PLC (LSE:ANTO), and Ivanhoe Mines Ltd. (TSX:IVN, OTCQX:IVPAF) could see their shares outperform over the next six months.