HSBC raises copper price forecast, sees rosy long-term outlook for the red metal

In its latest published report, HSBC has raised the copper price forecast from the earlier $2.95 per lb to $3.20 per lb. The report states that copper’s long term prospects look extremely bullish.

Global Head of Metals & Mining Equity Research Andrew Keen notes that the supply will outpace copper demand in 2015, but things are likely to change from 2016 onwards. The global copper market will most likely turn deficit starting 2016 onwards. The bank predicts a cyclical peak for the red metal in 2017. The prices may surge as high as $3.90 per lb in 2017.

The supply of copper from Chinese domestic mines will remain subdued. The report cites that China accounts for nearly 44% of the global copper demand, but the contribution of domestic mines in the country is only 9% of the global supply. The country faces severe shortage of quality copper reserves. The huge imbalance between supply and demand in China will impact the copper prices hugely. This will also trigger copper mine investments in the country.

Meanwhile, the 3-month price of copper rose 0.5 percent on the LME to $6,835 per metric ton, snapping its two day fall. The cash price of primary copper too increased by 0.4 percent on the LME to $6,856 per metric ton.