FX.co ★ Copper deficit to rise this year and then double by next year

An unprecedented rise to $ 10,000 could be the catalyst of a much stronger upward trend in copper.

In fact, in a report released on Monday, analysts at the Bank of America said copper prices could climb to $ 13,000 due to growing demand.

Currently, the metal costs $ 9,932.50, 0.32% lower than its value yesterday. Supply, meanwhile, is at the lowest level in 15 years.

The Bank of America compared copper's situation to nickel's back in 2006 and 2007. However, unlike the metal, copper's growing supply imbalance may not be short-lived and could worsen in 2022.

To be more specific, the bank expects the copper deficit to soar to 185 tons this year and then double to 369 tons by next year. They also project the market to balance with a surplus of 252 tonnes in 2023.

At the same time, they predict a significant increase in the supply of copper scrap because according to them, the secondary market is smaller and more volatile. They said the supply could rise to 6,700 tons by 2025.

But if these scenarios do not happen, copper could soar up to $ 20,000 per tonne.

"Experiencing the opposite will lead to supply running out within the next three years, which will lead to even sharper price fluctuations. In such a case, copper could hit $ 20,000 or higher."

Despite that, the Bank of America does not believe higher prices will impact global economic growth. They said the copper market accounts for a very little part of the global economy, so even if the metal trades at $ 12,000 a tonne this year, it will not surpass the peaks in 1970.