Copper outlook - Q3 2021

Copper has enjoyed a rapid recovery over the past year. Supply disruptions over this period provided further impetus as did investor enthusiasm on the back of copper and aluminium's relative medium to longer term demand prospects that will result from the de-carbonisation of the global economy. This year the strong rebound in demand growth together with a modest supply response, will result in a deficit and will underpin high prices. However, the upward momentum in prices is set to stall and subsequently come under pressure over the next few years as above average mine supply growth exceeds that of consumption, leading to several years of surplus and rising inventories. Beyond 2025, prices are expected to trade higher in reaction to anticipated deficits as the pace of base case mine supply growth slows against a backdrop of still steady demand. This should provide sufficient confidence to encourage producers to bring on the additional supply that is required to balance the market.