On April 15, copper prices hit a new high in more than a month. Metals, as an industrial leader, are crucial in the global drive for a green economy at a time when the market is facing a supply crunch.

Goldman Sachs (Goldman Sachs) believes copper will face a surge in demand and a shortage of supply, chronic structural underinvestment in the "old economy", including mining, infrastructure and industrial production; COVID-19 's new redistribution policy aimed at commodity-intensive social demand; and a sharp increase in government spending, especially in the US. These three factors will push copper prices up further.

Three major factors drive the sharp increase in market demand for copper

When Snowden (Nicholas Snowdon), a metals strategist at Goldman Sachs (Goldman Sachs), spoke on virtual World Copper Conference this week, he was in the bullish camp. Mr Snowden further confirmed the investment bank's view that the mining industry was at the beginning of a supercycle, citing three factors driving the overall boom in commodity markets:

The "old economy", including mining, infrastructure and industrial production, has been chronically underinvested; COVID-19 's new redistributive policy targeting commodity-intensive social demand; and a sharp increase in government spending, especially in the United States.

Mr Snowden says environmental policies will drive a surge in capital spending over the next decade, comparable to levels seen in the 1970s and 2000s, and copper is at the heart of the green energy transition: "We estimate that to achieve decarbonization, nearly $16 trillion will be needed for green infrastructure, compared with $10 trillion in the last supercycle. "

Another factor underpinning the rise in raw material prices is the exposure of the COVID-19 outbreak to the fragility of global supply chains and the subsequent decline in inventories in western countries, particularly in copper trade, where China's copper imports continue to record. Mr Snowden said that although the market had only now entered a period of shortage, the copper market would be the most tight since the mid-2000s by the second half of next year, with very low inventories, raising concerns about copper shortages.

"We are in the midst of an overloaded and synchronized surge in global demand," Mr Snowden said. We expect demand in advanced economies to grow by nearly 7 per cent this year. Environmental policies will drive a surge in capital spending over the next decade, as was the case in the 1970s and 2000s, with copper at the heart of the green energy shift. "

"Electric cars are a good example," said Friedland, founder of Ivanhoe Mining. Over the past 12 months, the policy signpost for the rapid adoption of (EV) electric vehicles has been clearly beneficial, and we have raised our forecast for internal electric vehicle penetration. These cars use four times as much copper as gasoline cars, and they need more infrastructure to connect charging stations to the grid. "

BHP expects demand for copper to more than double and demand for nickel to quadruple over the next 30 years under global emissions reduction targets consistent with the Paris agreement.

The supply gap turned into a gap.

On the supply side, Mr Snowden noted that the sharp drop in processing and refining costs reflected the poor performance of miners' supply, as evidenced by exports from Chile and Peru, which have not recovered as expected this year. According to Goldman Sachs, green-related demand will accelerate in the last five years of the decade, eventually generating nearly 5 million tonnes of additional demand.

Compared with the peak in global mine supply since 2024, these fundamentals will emerge: "by the end of the decade, a record long-term supply gap must be addressed by investing in new mine capacity," Mr Snowden said. "

Over the past few years, the long-term supply gap has indeed widened, with the current supply gap of 8 million tons almost double what it was during the last bull market in the 2000s and early 2010s. "this can only be solved by higher prices stimulating investment in new supplies," Snowden said. "

Goldman Sachs calls copper the new oil, copper prices rise

Goldman Sachs expects copper prices to average $11000 a tonne over the next 12 months. The price of copper could rise 66 per cent to $15000 a tonne by 2025, Goldman Sachs said in a report entitled "Copper is the new oil". Goldman Sachs also expects demand for copper to soar nine-fold to 8.7 million tonnes by 2030. If this process slows, demand will still soar to 5.4 million tonnes, an increase of nearly 600 per cent.

On Thursday, Meijing copper futures rose to $4.1815 a pound, an one-month high. The main contract of Shanghai Copper broke through yesterday's one-month high, rising to 68110 at one time.