Bank of America (NYSE:BAC)is forecasting that the price of copper could hit $20,000 U.S. per metric ton by 2025, fueled by global supply shortages.
In a note to clients, Bank of America highlighted the fact that copper inventories measured in tons are now at levels seen 15 years ago, implying that stocks currently cover just over three weeks of demand. This comes as the global economy is beginning to reopen from the COVID-19 pandemic.
Given the current environment and depleted inventories, Bank of America forecasts that copper may spike to $13,000 U.S. per metric ton in the coming years after hitting $10,000 U.S. last week for the first time in a decade.
Copper prices currently stand at just under $4.54 U.S. per pound, up 30% year-to-date. After deficits in 2021 and 2022, Bank of America expects the copper market to rebalance in 2023 and 2024 before shortfalls and a further draw down on inventories kick in from 2025 onwards.
Along with the broader economic recovery, demand for copper is also being boosted by its vital role in several rapidly growing industrial sectors, such as electric vehicle batteries and semiconductor wiring.
Commodity prices rose 3% in April of this year, taking the global index up 80% since April 2020. Demand for copper is being supported by investment in electrification as emission reduction strategies are supported by policymakers around the world.
