Bank of America recently issued a stark warning that a copper crisis may be imminent after copper prices jumped to a 14-month high on Monday. What do you need to know about copper lately?
Well, according to some analysts, the metal may be on the way to a supply crisis resulting from increased use in the electric vehicle (EV) and renewable energy spaces, paired with insufficient mining practices.
BofA metal strategists led by Michael Widmer believe this could push copper prices up to $10,250 per ton:
“The much-discussed lack of mine projects is becoming an increasing issue for copper. This, along with investment in green technologies and a rebound of the global economy, should lift prices to US$10,250/t (465c/lb) by the fourth quarter.”
With copper currently sitting at around $9,281 per ton, this implies the metal has the potential to rise more than 10%. Further, copper prices are expected to rise to more than $12,000 per ton in 2026, reflecting roughly 30% upside.
BofA has also upgraded its ratings for copper makers Freeport-McMoran (NYSE:FCX) and Hudbay Minerals (NYSE:HBM) to “buy” from “neutral.” That’s a further indication of the metal’s expected rally.
Widmer referred to copper as the “epicentre of the energy transition,” perhaps reasonably so. While new developments in EV technology have required less copper, other sectors remain dependent on the metal. Chiefly, copper is essential for its uses in the electricity network and in data center cabling.
Is a Copper Crisis on the Way?
The current state of copper production is marred with inefficiencies. China, which produces more than half of the world’s refined copper, has struggled with mining disruptions forcing some smelters to pay highly elevated prices to purchase the mined ore. China plants are currently considering output cuts as a means of combatting the practice.
“Tight copper mine supply is increasingly constraining refined production: the much-discussed lack of mine projects is finally starting to bite,” Widmer noted.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
