The scheduled swearing in of Donald Trump as President of the US next week provides headwinds to the copper market amid a stronger dollar, looming tariffs and potential deceleration in the energy transition, prompting market analyst BMI – a unit of Fitch Solutions – to revise downwards its average copper price forecast to $10 000/t for this year.

BMI says mainland China’s policy support is unlikely to bring about a turnaround in the lingering property market downturn at this point, providing additional headwinds for the metal.

The market analyst points out that copper prices had averaged $9 277/t in the year to December 17, 2024, and that prices were currently hovering at about $8 990/t.

It notes that the price has been dragged down by bearish sentiment over a more hawkish US Federal Reserve and uncertainty about whether Beijing's commitment to "vigorously boost consumption" and "expand domestic demand on all fronts" in 2025 would be sufficient to offset the drag from a property sector slump and potential higher US tariffs.

“While we still expect that copper will continue to thrive due to climate-driven sentiment, we note that the balance of risks to our relatively bullish outlook is tilted to the downside.

“A deceleration in the energy transition potentially looming over Trump-led policy shifts might dampen the 'green sentiment' that bolstered prices in 2024,” says BMI.

“At this point, we do not expect a significant boost to metals demand from the China construction sector to materialise, given that the sector remains in decline that could last several years,” it adds.

However, the company says that, if government policy support results in a stronger momentum for a property sector turnaround and leads to improvement in industrial activity and growth this year, there may be a sufficient boost for copper prices.

BMI says its forecast is still above consensus, as it believes that copper will continue to be supported by climate-driven sentiment, yet noting that the balance of risks is currently skewed to the downside.

“However, if Beijing's policy support results in stronger Chinese economic momentum than our current expectations, this would be sufficient to boost prices.”

In the longer term, BMI says it expects prices to reach $17 000/t in 2033, as the structural deficit persists owing to a strong demand outlook as the green transition accelerates.

PRODUCTION

BMI says it expects refined copper production to grow by 3.6% year-on-year in 2024, supported by China's expansion capacity, as well as additional output from the Democratic Republic of Congo.

That said, the financial analyst says refined copper production growth will slow down compared with the 4.7% year-on-year growth recorded in 2023, as supply issues at major mines will continue to pose downside risks to copper concentrate supply growth, putting pressure on refined copper output.

“In the long term, we expect to see a rise in development of new copper projects, backed by government initiatives to boost availability of critical minerals to support the low-carbon energy transition.”

Globally, BMI says it expects copper consumption growth to have increased by 2.5% year-on-year for 2024 and to expand further by 3.6% year-on-year this year, while remaining relatively constrained by the subdued outlook for major markets.

“However, we note that the green energy transition will partially offset this downside pressure. Over the rest of the decade, we anticipate strong demand growth driven by the renewables and autos construction industries,” it says.