Copper Price, page-10

From GS today. The bull market for copper is now fully underway with prices up 50% from the 2020 lows, reaching their highest level since 2017. This current price strength is not an irrational aberration, rather we view it as the first leg of a structural bull market in copper. Going into 2021, the copper market will face the tightest market conditions in a decade owing to a substantial deficit (327kt). Nor should there be comfort in what follows after that, with a continuation in tight copper markets now anticipated in both 2022 (153kt deficit) and 2023 (35kt surplus). 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. Accordingly, we raise our 12-month copper target to $9,500/t ($7,500/t previously), and now expect a sustained, higher average price for both 2021 ($8,625/t average) and 2022 ($9,175/t average). We believe it highly probable that by 1H2022 copper will test the existing record highs set in 2011 ($10,170/t). Higher prices will ultimately help defer peak supply and ease market tightness, but this first requires a sustained rally through 2021-22.”