Another positive article for the immediate future of copper...

Another positive article for the immediate future of copper stocks.

This is great news for PXX and it's Caribou Dome Deposit.

Goldman Sachs continues to ring the bell for copper bulls, continuing to predict prices will hit US$10,000/t in the next 12 months in a rare note of optimism for the battery metals sector.

While lithium and nickel prices have been tumbling and graphite and manganese remain in the gutter, copper has emerged as a beacon of light in the wake of a string of mine closures and production failures that have market experts predicting an earlier swing to deficits than previously forecast.

The latest run in copper prices has been propelled by RRR rate cuts in China, with a reduction of the reserve ratio needing to be held by Chinese banks expected to free up around US$140 billion in liquidity in the Middle Kingdom.

But in a note last Thursday, Goldman’s commodities research team says there are ‘exceptional fundamentals’ for the red metal regardless of China’s economic policy settings.

“That said, this adjustment in policy can help boost sentiment and support credit extension as noted by our economists, which we think should in turn reduce the left tail risks to China’s traditional copper demand (property, appliance, machinery),” GS analysts said.

“We expect the copper market to be in a 428,000t deficit distributed throughout the year, between a modest 269,000t seasonal surplus in Q1 and a 696,000t deficit over Q2-Q4.

“The market has suffered from supply shock over the past quarter from a series of mine supply downgrades tightening the concentrate supply.

“Falling spot TCRCs in China (treating and refining charges) reinforce out expectation for a sharp deceleration in refined output growth this year (GSe +1.3% y/y vs. +4.2% y/y in ’23).”

Meanwhile, GS thinks copper demand will lift 2% this year against a 3% decline last year outside China, with ‘inventory build well below seasonal norms’.

That could bring the great tightening in copper markets forward earlier than expected. Happy claim for those hopeful of a return to the halcyon times of May 2021, when copper hit a record US$10,700/t.