According to the Strategic Analysis Center of the Serbian Chamber of Commerce, the global copper prices are likely to hit a new high in the next 12 months, not only exceeding the $10,845 per tonne in March 2022 or even the $12,000 per tonne. It cited three main reasons for the rise in copper prices, namely lower copper production, lower inventories and increased demand for copper in China.

As an important commodity, copper is often endowed with dual attributes by the market, that is, its own commodity attributes and the derivative financial attributes related to the dollar:

From commodity attribute, copper price will be affected by supply and demand relationship.

From the perspective of financial attributes, due to the negative correlation with the US dollar, its price will also be subject to the fluctuations of the US dollar.

From the point of demand, with the outbreak of new energy, new upcoming copper demand cycle. In the current mainstream new energy field of the market, there is a large demand for copper in new energy vehicles, photovoltaic and wind power.

From the supply side, supply is expected to fall short due to the lack of capital expenditure by major copper miners worldwide since 2014. In recent years, the supply of new copper production capacity has been undersupplied by a trend of declining capex growth between 2014 and 2019 among the world's 35 major copper miners. According to Wood Mackenzie, global new copper output in 2020 is negative 187,000 tonnes.

Copper prices are also highly correlated with the economy because of its widespread industrial use. According to the IMF's latest World Economic Outlook Report, global economic growth will remain at 3.2% in 2022, but is expected to slow to 2.7% in 2023, with a 25% chance of falling below 2%. The economic downturn is also expected to continue due to interest rate hikes, the Russia-Ukraine conflict and the outbreak of COVID-19, which will put pressure on copper prices in 2022-2023. On a fundamental level, Chile, the world's largest copper producer, is forecasting a surplus of 329,000 tonnes by 2023, mainly due to a short-term reduction in demand due to the economic downturn and a recent surge in supply at the mine end. This has also led to two years of underlying price pressure.

But extending the cycle to 2025 gives copper more upside confidence. Copper, a staple metal in the electrical industry, is expected to see a significant boost in demand due to global green energy growth and other factors. On the supply side, since the development cycle of copper mines is generally 8-10 years, it is difficult for more supply to increase in the short term after the release of capacity of newly added copper mines in recent years. In addition, the current taste of copper mining in the world is gradually declining, and it is expected that there will be a structural supply gap by 2025, which will also bring long-term positive situation for copper prices.

It is expected that the center of gravity of copper price will maintain to 65,000 yuan/ton in 2023; By 2025, due to structural demand increase and supply and demand imbalance and other factors, copper price gravity will rise to 80 million/ton.