Copper Prices Rebound: UBS Analysts See Buying Opportunity as Market Tightens
Despite recent corrections, UBS Global Research believes that current copper prices present a compelling entry point for investors in the medium-term. While macroeconomic conditions are challenging, the long-term fundamentals for copper remain strong.
UBS predicts a tightening market towards late 2024 and into 2025, driven by limited supply growth and a rebound in demand. The recent drop in prices was mainly due to speculative unwinding rather than fundamental weakness.
Although the price of copper could potentially decline further to around $8,500 per ton, UBS does not foresee any immediate triggers for a sharp rebound in the third quarter of 2024. However, they remain cautiously optimistic about a tightening market by late 2024.
On the supply side, mine production faces constraints, with minimal growth expected in 2024. Looking ahead to 2025, UBS anticipates modest supply growth of around 2.5%, driven by major projects like Kamoa-Kakula and Oyu Tolgoi.
Despite weaker-than-expected demand, particularly in China, UBS maintains a positive medium-term outlook for copper. They expect demand to rebound driven by restocking, improved sentiment, and the global shift towards renewable energy and infrastructure development.
Overall, the combination of secular demand drivers and constrained supply is likely to support elevated copper prices over the long term.