The Zhitong Finance App learned that Chile, the world's largest copper supplier, recently raised its copper price forecast. The logic behind it is that the US credit environment may relax. More importantly, global copper demand will continue to grow during the global energy transition from fossil fuels to renewable energy. Related concept stocks: Zijin Mining (02899), China Nonferrous Mining (01258), Jiangxi Copper Co., Ltd. (00358), Minmetals Resources (01208).

Chile's National Copper Commission (Cochilco) said on Monday local time that its latest forecast for copper will average 3.85 US dollars per pound this year, higher than the previous forecast of 3.75 US dollars. The committee expects an average copper price of $3.90 next year. Currently, the international price of copper is around $3.78 per pound on a per-pound basis.

On the supply side, Cochilco said that global copper production is expected to increase by 5.8% this year, reaching 22.79 million tons, exceeding the 3.2% growth rate of demand, and copper production will increase to 23.5 million tons in 2025. Among them, Chile's copper production will increase by 5.7% this year to 5.63 million tons. This is mainly due to increased production of Tektronix's Quebrada Blanca Phase II project, which will increase 6.4% to 6 million tons next year.

According to the report, Chile will maintain its position as the world's largest copper producer, while the Democratic Republic of the Congo will become the second-largest copper producer this year, while Peru will drop to third place.

On the demand side, downstream applications of copper are mainly power infrastructure, real estate and home appliances, new energy vehicles, etc. In fact, against the backdrop of weakening demand for metals overseas, most copper demand is mainly driven by China.

Overall, the growth rate of traditional demand for real estate and home appliances is slowing down, but demand for copper in the new energy economy represented by new energy vehicles is growing rapidly. CICC expects global copper consumption from new energy sources to increase by 570,000 tons to 3.53 million tons in 2024. According to CICC's demand model, the share of new energy demand in China's copper demand has risen from 4% in 2018 to 14% in 2023, while the share of demand for construction and traditional infrastructure fell from 53% to 47%.

Furthermore, at the recent COP28 climate change conference held in Dubai, UAE, more than 60 countries unanimously supported the tripling of global renewable energy production capacity by 2030. Citibank expects that the renewable energy targets set by various countries will increase the demand for copper by an additional 4.2 million tons by 2030, which will greatly boost copper prices.

Also, according to previous research by the China Post Securities Nonferrous Metals Team, global copper resources are mainly concentrated in countries such as Chile, Peru, and the Democratic Republic of the Congo (DRC). However, due to factors such as insufficient long-term capital expenditure, limited new supply, and geographical conflicts, there is great uncertainty about copper ore output. China Post Securities estimates that in 2024, there will be another gap between global copper supply and demand, and the gap between supply and demand in 2025 may reach 662,000 tons.

Price prospects for several metals, including copper, are improving as US policymakers seek normalization of interest rates. The acceleration in the pace of electric vehicle sales and, more importantly, the surge in copper demand brought about by the global shift to renewable energy, have combined to stimulate additional demand for metals such as copper in the global energy transition process. Thus, these factors have combined to offset the increasing trend of global geopolitical risks. Wall Street banks Citi and Goldman Sachs both expect LME copper prices to rise to 15,000 US dollars/ton in 2025. The latest LME copper price was $8,339 per ton.

Goldman Sachs expects copper prices to hit 10,000 US dollars per ton in 2024 and rise sharply in 2025. “Our confidence that copper prices will rise sharply to an average of 15,000 US dollars per ton in 2025 is now greatly strengthened.”

Citigroup stated in a report released in December 2023 that higher renewable energy targets will increase copper demand by 4.2 million tons by 2030. Citi believes this trend could push copper prices to $15,000 per ton in 2025, far higher than the historical peak of $10,730 per ton in March 2022.

Related concept stocks:

Zijin Mining (02899): Zijin Mining announced the output of its main products in 2023. In 2023, the mine produced 1.01 million tons of copper, an increase of 11%; smelting produced 720,000 tons of copper, an increase of 4% over the previous year.

China Nonferrous Mining (01258): According to the Minsheng Securities Research Report, considering that the company's self-produced copper production increased more than expected and the profit forecast was raised, the company is expected to achieve net profit of 3.64/382/403 million US dollars in 2023-2025, respectively, and EPS of 0.1/0.11 US dollars, respectively. The company's self-produced copper production has been increasing steadily. Based on existing resources and production, the market value is significantly undervalued.

Jiangxi Copper Co., Ltd. (00358): Citigroup Research reports that based on the third quarter results, the company's valuation model was updated and the profit forecast for 2023-24 was raised 16%/9% to 61.6 billion yuan, and the 2025 forecast was lowered by 1% to 7.6 billion yuan, mainly due to the expected increase in the unit cost of copper mines and the increase in the gross profit margin of the smelting business.

Minmetals Resources (01208): According to the CITIC Securities Research Report, the company's net profit forecast for 2023-25 is US$0.6/1.99/463 million, with a target price of HK$3.5. Against the backdrop of steady production of LasBambas and the continuous recovery of DugalDriver production, 2023Q3's copper and zinc production both increased month-on-month. Among them, LasBamBas's single-quarter production continued to reach new highs since 2021. Positive developments in community negotiations have injected stronger expectations into opening up room for volume growth in the copper sector.