Bernstein has published an updated long-term outlook for copper, structured around four key themes that highlight the distinctive dynamics of the metal’s market.
The analysis begins by framing how to think about copper markets, noting that in a free market, price acts as the balancing mechanism between supply and demand. According to Bernstein, “missing supply” essentially translates into “high copper prices.” Their models indicate that a significant supply gap may emerge after 2028, while the market remains roughly balanced today at around $10,000 per tonne.
The firm highlights that copper mines exhibit left-skewed output distributions, meaning that negative events are more likely than positive ones. As a result, disruptions don’t simply average out and are critical for accurately forecasting market balances.
Bernstein describes the copper balance as functioning more like “a mechanical watch rather than a see-saw,” with many small moving parts influencing overall stability. Despite well-documented mine outages at locations such as Grasberg, Kamoa Kakula, and Cobre Panama, the firm expects the copper market to remain reasonably balanced in the near term.
On pricing, Bernstein observes that above-ground stockpiles can distort price signals for balancing supply and demand. Currently, the market is one standard deviation tighter than its long-term average. Their models suggest that a market half a sigma tighter could push copper to $16,000/t, while a half sigma looser could depress prices to $9,000/t.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
Leave a Reply