Global investment bank Goldman Sachs (NYSE:GS) says copper’s bull run could continue well into 2022 and forecasts that the metal is likely to hit US$10,000/tonne for just the second time in history.
Proactive Investors reported last week that copper had risen to two-year highs on the back of increased investment into renewable energy.
Copper peaked above US$10,000/tonne in 2011 on the back of Chinese economic stimulus and a 2000s commodities boom.
The copper price closed at US$7,741 on Friday last week and Goldman Sachs says there is now a clear pathway for it to hit five figures by the first half of 2022.
“Structural bull market”
“This current price strength is not an irrational aberration, rather we view it as the first leg of a structural bull market in copper,” Goldman Sachs metals strategist Nicholas Snowdon said.
The prediction aligns with the view of global broking house Jefferies, which last week predicted copper demand to “significantly exceed” supply by 2021.
“Going into 2021, the copper market will face the tightest market conditions in a decade owing to a substantial deficit,” Snowdon says.
“We expect this period to be framed by a robust cyclical and policy-driven demand environment set against already low inventories, a fast-approaching peak of base case mine supply and a falling dollar.
“We believe a significantly higher copper price is needed to help balance this structurally tight fundamental backdrop.”
Encouraging for Castillo Copper
The predicted price rise is good news for Australian mid-tier copper hopeful Castillo Copper Ltd (ASX:CCZ) (LON:CCZ) (FRA:7OR), which recently returned impressive results from the Big One Deposit at its Mt Oxide Project in the Mt Isa copper belt.
Preliminary assay results of visually logged mineralised intersections confirmed the presence of shallow copper mineralisation of up to 4.14 per cent in four drill-holes at the Big One Deposit, as Proactive Investors wrote in late November.
Castillo Copper managing director Simon Paull said investors should be excited about the project’s potential in 2021.
“With the copper price near a seven-year high, coupled with favourable global fundamentals moving forward, the Board’s strategic intent to transform CCZ into a mid-tier copper group is gaining momentum,” he said.
“We have a busy forward agenda which will generate significant forward newsflow over the balance of the year.”
Further Australian copper hopefuls benefitting from the increased optimism include producer Aeris Resources Ltd (ASX:AIS) and explorers Havilah Resources Ltd (ASX:HAV), Alicanto Minerals Ltd (ASX:AQI) and Argonaut Resources (ASX:ARE).
- Daniel Paproth