UBS has raised its copper price outlook, forecasting continued gains driven by ongoing mine disruptions and strong long-term demand from electrification and clean energy investments. The bank highlighted that persistent supply challenges are likely to continue, further tightening the global copper market.
Copper Price Forecasts and Market Deficits
In its latest projections, UBS increased its copper price forecast to $11,500 per metric ton, up $750 from previous estimates. Prices for later periods are now projected at $12,000 and $12,500 per ton, respectively, while a new target of $13,000 per ton has been introduced.
UBS also revised its market deficit forecasts, estimating a shortfall of 230,000 tons, up from 53,000 tons previously, and 407,000 tons, compared with the prior 87,000-ton projection. The bank cited falling inventories and persistent supply risks as the main factors keeping market conditions tight.
Mine Disruptions and Structural Supply Challenges
Supply constraints have been driven by a series of mine disruptions. Notable challenges include operational issues at Freeport-McMoRan’s Grasberg mine in Indonesia, slower output recovery in Chile, and recurring protests in Peru. These incidents underscore structural limitations in copper supply that are expected to continue.
Freeport-McMoRan has announced plans to restore production at the Grasberg copper and gold mine following a temporary shutdown caused by a fatal incident, with operations expected to resume soon.
Production Growth and Demand Drivers
UBS trimmed its refined copper production growth estimates to 1.2% and 2.2%, citing declining ore grades and ongoing operational challenges.
On the demand side, the bank projects global copper consumption growth of 2.8% annually, fueled by:
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Electric vehicle manufacturing
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Renewable energy expansion
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Power-grid infrastructure investment
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Data center construction
Market Strategy
UBS indicated that any temporary copper price weakness is likely to be short-lived. The bank recommends maintaining long positions in copper or employing volatility-selling strategies to capitalize on market fluctuations.
In related trading, the most-active copper contract on the Shanghai Futures Exchange recently closed slightly higher at 86,080 yuan ($12,113) per metric ton, reflecting ongoing tightness in the market.
