SimoneN/iStock via Getty Images
Copper futures are moving higher Thursday, as an easing of COVID restrictions in top consumer China sparks hopes for more demand, and Goldman Sachs predicts copper prices could reach a record high $11K in the coming year.
According to Reuters, benchmark copper (HG1:COM) on the London Metals Exchange recently was +0.5% at $8,501/metric ton, up 3% so far this month after surging nearly 11% in November on initial expectations that China would pull back its zero-COVID policies.
ETFs: (NYSEARCA:CPER), (NYSEARCA:COPX), (JJC), (JJCTF)
Freeport McMoRan (NYSE:FCX) +1.9% and Southern Copper (SCCO) +1.6% pre-market; other potentially relevant names include Teck Resources (TECK), Hudbay Minerals (HBM), Taseko Mines (TGB) and First Quantum Minerals (OTCPK:FQVLF).
Goldman Sachs said copper prices will jump to record highs in the next 12 months, as a looming supply shortage coincides with growing demand, keeping the physical market for the metal in deficit in 2023.
Goldman now forecasts a 178K metric ton deficit in the copper market next year, compared to its previous outlook for a 169K-ton surplus, causing the firm to raise its 12-month copper price target to $11K/ton from its prior forecast of $9K/ton, with the average price for 2023 raised to $9,750/ton from $8,325 previously.
China likely will accelerate its restocking of depleted inventories next year as it ramps up toward a COVID reopening and enacts measures to stabilize its troubled property sector.
"Copper's long-term fundamentals remain intact, and Freeport McMoRan (FCX) is well-primed to leverage the recovery in underlying copper futures," JR Research writes in an analysis published recently on Seeking Alpha.