Copper is facing headwinds in the second half of 2022, broker RBC suggests but the longer-term outlook remains solid.
Slowing global growth as the world deal with high inflation and tightening monetary policy is the main hurdle suggests the broker, though stocks are low by historic standards, which will provide an offset.
Demand growth from electrification and expected deficits further will also provide some support as well as renewed stimulus measures in China, though here the challenges in the property market, one of the main users of copper, might limit the impact.
Even so, the price is expected to ease into 2023 ($3.75/lb) as supply normalises, new mines come online and demand moderates.
Copper miners remain well-positioned to drive strong free cash flow despite rising costs, and valuations are now closer to historic averages after the recent pullback.
Shares in Antofagasta rose 2% to 1,525p and have rallied over the past month.