Recently, due to weakening demand and a global oversupply in the copper market, copper prices have experienced a significant decline. Despite this, Reid I'Anson, a senior commodity analyst at market intelligence firm Kpler, believes that although short-term selling is inevitable, those who continue to invest in copper may reap rewards in the long run.

The imbalance in supply and demand has led to a fall in copper prices.

In the first few months of 2024, copper prices once surged, but Reid I'Anson stated that the short-term outlook for copper remains weak. In addition to demand issues, oversupply is also a major factor contributing to the current decline in copper prices.

“The supply looks pretty strong right now. If you think about the balance of supply and demand, you’ll find that we’re over-demanding,” said Goldman Sachs analyst Adam Gillard, who also warned that the market situation is continuing to deteriorate and is currently a surplus market and the price of copper will fall in the short term.

Long-term investment still has potential

Although copper prices have seen a noticeable short-term correction, Reid I'Anson remains optimistic in the long run. He pointed out that the long-term growth prospects of the electric vehicle and artificial intelligence industries will continue to drive the increase in copper demand.

“At the moment, these industries around electric vehicles and artificial intelligence are long-term industries... In the long run, we’re still looking up and we think copper looks like a good investment,” he said, adding that there’s still a lot of renewable energy construction in China that helps support copper demand.

Impact of the Electric Car Industry

Hallgarten’s mining strategist Christopher Ecclestone has a different view of the electric car industry. He believes that the electric car industry is used to sell stories about “winning rich in the future” and that current claims about copper shortages are just a myth that copper shortages may occur in the future, but not now.

“For investors, buying or not buying copper depends on the outlook for the global economic recovery... If you believe that future economic conditions will improve, the current price could be a good point of purchase,” Ecclestone said.

Forecasts of future copper demand

Despite the over-supply in the short-term copper market, most analysts still believe that copper shortages will be an objective fact.The uncertainty of the global economic recovery has increased the markets swing over the copper shortages theory, but in the long run, copper demand will grow significantly.

Analysts expect the demand for copper to double from the current level to 50 million tons in order to the target of close to zero net emissions by 2035. Even with conservative estimates, demand will increase by at least one-third in the next decade, which will put pressure on the copper market in the short and long term.

Uncertainty in global markets

Uncertainty in the global markets has influenced the fluctuations in copper prices to a certain extent.While the current surplus supply has caused prices to fall, future demand growth is expected to make copper still seen as a raw material with long-term investment potential.

In summary, although copper prices decline in the short term due to excessive supply, in the long run, as the global transition to renewable energy and electric vehicles continues to grow, copper demand will continue to grow.Investors need to be cautious about short-term market volatility, but in the long run, the prospects for the copper market remain bright.