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Commodities Price Outlook

Copper’s recent rally unlikely to be sustained in the short term

Copper prices soared in the past month, shaking off all of this year’s losses amid upbeat Chinese demand and supply-side concerns in top producing countries. On 10 July, the red metal closed the day at USD 6,419 per metric ton, which was up 9.1% from the same day last month. Moreover , the price was 4.4% higher on a year-to-date basis and was up 8.3% from the same day in 2019. 

Prices for the red metal jumped to an over one-year high at the outset of Q3, boosted by recovering demand and constrained supply. Investors’ appetite for copper has been stoked by expectations of rising demand in China, the world’s largest consumer of the metal, as signaled by upbeat industrial metrics in the second quarter amid strong fiscal and monetary stimulus from Beijing. Demand expectations were also buttressed by falling copper inventories in both LME and SMM warehouses in early July. Moreover, concerns over supply propelled prices higher at the end of June, as top producers Chile and Peru introduced stringent social distancing measures in their copper-producing regions, in an effort to contain a rampant increase in Covid-19 infections.

Copper’s recent rally is unlikely to be sustained in the short term. Prospects of higher demand for copper will likely ease in the coming months as a rising unemployment rate in the world’s largest economies hinders demand for end products.


Looking further ahead, the medium-term price outlook looks brighter as refined production lags slightly behind usage, amid limited production capacity and increasing demand for copper in new technologies such as electric vehicles and greenenergy projects. A likely second wave of Covid-19 infections globally is a key outlook risk.

Our panel of 27 forecasters projects copper prices to average USD 5,808 per metric ton in Q4 2020 and USD 6,102 per metric ton in Q4 2021. The minimum forecast for Q4 2020 is USD 4,901 per metric ton, while the maximum forecast is USD 6,262 per metric ton.

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