Goldman Sachs and Bank of America said copper could hit a record high next year, as tight short-term supply and long-term energy transition-related demand boosted the red metal. price. Three-month futures on the London Metal Exchange traded around $8,525 a tonne on Friday in Europe. It comes after the metal had its strongest month since April 2021 in November on hopes demand will pick up if China eases its Covid-free policies. LME copper prices peaked at over $10,600 a tonne in March of this year, but two of Wall Street’s biggest names expect prices to continue rising in the near-term. Goldman last week raised its 12-month forecast for the metal to $11,000 a tonne from $9,000 a tonne. The bank also raised its average price forecast to $9,750/mt for next year and $12,000/mt for 2024. The bank said the expected surplus, which has put pressure on prices, has not materialized and is unlikely to come true. may happen. “We think the low inventory forecast in 2023 will lead to another shortfall in the market,” Goldman analysts led by Nicholas Snowdon said in a research note on Dec. Another shortfall next year will push fundamental conditions to unprecedented extremes.” , as China relaxes its Covid-free restrictions and begins to reopen, stockpiling replenishment will take place. “If China brings the ratio of copper stocks to consumption back to pre-2020 levels, that means physical demand will increase by 500 thousand tons,” the analysts added. Meanwhile, Bank of America gives a $10,000 price forecast for Q4 2023 – and says that if the right circumstances come together, it could hit $12,000/ton next year. Such a scenario would require the US Federal Reserve to pivot towards less aggressive monetary policy tightening, limiting US dollar appreciation and demand to remain supported as the process continues. energy conversion according to the acceleration plan. Both Goldman and Bank of America highlighted the energy transition as the main driver of the copper market going forward. Copper is an important component in electric vehicles, used in batteries, wiring, charging points, etc. It is also used in batteries to store energy, as well as generate wind and solar power. Goldman’s Snowden said: “We saw a 3% increase (42k metric tons) in green transition-related demand in Europe and 17% (92,000 metric tons) in the US, offsetting 53% of the decline. industry cycle”. While Bank of America’s Michael Widmer said: “Copper is set to recover as the use of green technologies will offset the weakness in cyclical demand.” “Apart from support from the demand-side energy transition, the copper market remains tight as supply disruptions become more pronounced,” he added in a November 20 note. and bottlenecks have contributed to production limits. “Feedback from LME Week suggests that these production losses have reduced the consensus market surplus next year from around 1 million tonnes to the current 300 thousand tonnes. In short: the market continues to overestimate increase supply,” he concluded. — Weizhen Tan of CNBC contributed to this report.