Copper Stocks Rally As Market Tightness Reaches Historic Levels: Analysts See Major Scarcity By 2025

Shares of global copper miners, as tracked by the Global X Copper Miners ETF COPX, have seen a remarkable rally in March, rising over 13% month-to-date on track for the best-performing month since November 2022.

Key players within the industry, including Southern Copper Corp. SCCO and Freeport-McMoRan Inc. FCX, have witnessed substantial gains, with stock prices rising 25% and 18% month-to-date, respectively.

The catalyst behind the move has been the rise in copper prices, fueled by a pronounced tightness in the global copper market.

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Copper Market Tightness Hits Record

Goldman Sachs commodity analysts Lina Thomas and Daan Struyven recently highlighted the acute market tightness, noting that global visible copper stocks, as a percentage of demand, have continued to decrease, reaching levels not seen in recent history.

The current copper coverage ratio, an indicator of global inventory levels against demand, stands at a historic tightness percentile of 100.

According to the experts, this is the result of the convergence of record-low copper stocks, anticipated peak mine supply in the coming year, robust demand growth from green technologies, and the low price elasticity of both demand and supply.

Such conditions, according to the analysts, set the stage for scarcity pricing in the copper market by 2025, with potential significant implications for the global economy, particularly industries reliant on this crucial metal.

Goldman Sachs maintains a structurally bullish outlook on copper and refined oil products, while adopting a bearish stance on U.S. natural gas for 2024.

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Image created using artificial intelligence with Midjourney.