The latest analysis from Goldman Sachs points to a shift in the forecast for the copper market in 2024.
Over the past six months, there has been a notable tightening in the expected trajectory of copper fundamentals.
This new projection is a departure from previous estimates made in mid-2023.
Considerable deficit
According to the updated assessment, the copper market is likely to experience a considerable deficit of 428,000 tonnes this year.
This figure sharply contrasts with the earlier forecast, which predicted a deficit of only 182,000 tonnes.
The deficit distribution is expected to vary throughout the year, with a modest seasonal surplus of 269,000 tonnes in the March quarter, followed by a substantial 696,000 tonnes deficit in the remaining months.
This revised deficit is primarily due to a reduction in mine production and refined copper output.
Moreover, the current global visible copper stocks stand at a mere 260,000 tonnes. Such low levels suggest the possibility of scarcity-like conditions in the copper market.
The anticipation of these conditions coincides with a more supportive macroeconomic environment.
Fed easing cycle
It is expected that the Federal Reserve will begin an easing cycle in the near future, which historically has influenced copper prices.
In similar past scenarios, copper prices have seen an average increase of 13% in the 75 days following the first cut in non-recessionary Fed cutting cycles.
In light of these developments, Goldman Sachs maintains a 12-month target for copper prices, aiming for $US10,000 per tonne.
Meanwhile, the current copper price remains stable, with the latest trading in London reporting a price of $US8,345.50 per tonne.