However, they argue that, based on current fundamental indicators, this price movement appears “overdone and the risk of a sharp correction is very high, if not already underway.”
“We expect prices to ease from their recent highs to average $9,800/t in Q3, before recovering back up to $10,500/t average in Q4 if the forecast deficit for the full year starts to materialise,” strategists at Macquarie said in a note.
After revising their copper market outlook, Macquarie notes that their committed mine supply forecast for 2024 remains largely unchanged but is lower for 2025-2028 due to conservative assumptions about the potential restart of Cobre Panama.
If the mine restarts, the market could face a surplus. The firm also reduced refined production forecasts due to a lack of concentrate feed, but higher copper prices have balanced the market by encouraging more scrap processing.
Meanwhile, the strategists have increased ex-China demand for 2024, driven by a positive macro outlook, but slower Chinese demand growth due to a weaker property market has offset this, reducing the 2024 forecast deficit from -244kt to -86kt.
“Despite sizeable growth in mine supply and smelter output in 2025, we expect the market to be finely balanced due to higher demand ex-China,” said strategists.
“A small refined surplus in 2026 will be short-lived, with the market returning to deficit from 2027 and a theoretical supply gap of 1.6Mt opening up by 2030,” they added.
