Copper Price Forecast: Top Trends That Will Impact Copper in 2024

Experts watching Chinese demand closely

Copper prices are heavily influenced by supply and demand. The global real estate sector broadly influences the red metal, as was evident following the rout in the Chinese market and the collapse of two of its largest companies.

The country hit an annual record of 1.8 billion square meters of new residential properties built in 2021, but the number has since plummeted, hitting only 699 million square meters from January to October 2023. The sector is expected to improve in the longer term, stabilizing in the 1.2 billion square meter range, but a recovery is still dependent on policy decisions from China’s central bank as it attempts to get deflation in check. Analysts are expecting cuts to the reserve requirement ratio in the first quarter in order to increase liquidity in the economy.

According to Fitch, higher-tiered Chinese cities will likely see the earliest benefits as the government begins to provide better access to funding for developers, and starts to remove purchasing restrictions.

In an October release, the International Copper Study Group, an intergovernmental body made up of government officials and industry experts, suggests that easing demand from China will lead to a 2024 copper surplus. However, events at the end of 2023 led to 600,000 MT of copper production being wiped out.

Cobre Panama closure could bring copper deficit forward

Copper's future is often described as strong long term, but potentially weak short term. Now that may be changing.

“Most analysts are modeling growing deficits in the copper market balance by 2027-2028, with a near-term forecast (2024-2026) hinting at surpluses until then; however, recent developments suggest a shift toward deficits by late 2024 due to production shortfalls by large producers," Joe Mazumdar of Exploration Insights told INN by email.

This shift in outlook has largely been influenced by production issues, most notably the shutdown of First Quantum Minerals' (TSX:FM,OTC Pink:FQVLF) Cobre Panama mine, which accounted for about 350,000 MT of the world's annual copper production. However, it’s not just the closure of Cobre Panama that is impacting supply.

“Anglo American (LSE:AAL,OTCQX:AAUKF) revised its 2024 copper production target downward to 730-790 thousand tons of copper compared to 1 million tons due primarily to its Los Bronces copper mine’s underperformance, with production shortfalls expected to continue into 2025,” Mazumdar noted.

Independent metals and mining consultant Karen Norton shared a similar sentiment, telling INN, “Supply growth is likely to be more constrained than previously anticipated with the suspension of the sizable Cobre de Panama mine and the cut to guidance by Anglo American.” She also said the economic backdrop may keep demand in check through H1.

Investor takeaway

Copper is facing uncertainty in 2024 as expectations for a surplus turn into a possible deficit.

“With the market now looking more finely balanced, prices are likely to prove more susceptible to broader swings in either direction in the advent of significant news that affects the market,” Norton commented. “Overall, while the range might be wider than the fundamentals previously suggested, the annual average may not be that much different to 2023, although the improving economic picture should see it end the year stronger.”

A Reuters poll of 28 analysts shows a 2024 forecast of US$8,625 for the London Metal Exchange cash copper contract.

In the near term, that means capital difficulties could continue for producers that are at critical phases in their expansion and development plans, or exploration companies looking to fund projects.

Beyond 2024, however, with increasing shortfalls in mining supply, the price of copper could start to head higher, which would in turn help the business side overcome obstacles in the current cycle.