Focus on Copper: a market in search of balance

By Marco Mencini, Head of Research of Plenisfer Investments SGR


The Basic Resources Europe index, which includes major listed mining operators, was trading at the lowest levels recorded in the last twenty years compared to the MSCI World as of last December (Source: Bloomberg). 

This is a surprising trend, considering that some metals are essential in electrification process. This process is crucial for the energy transition, a new structural driver of long-term demand for certain metals.

Copper is certainly among these metals. 

Currently, copper is priced at around $8,400 per ton, down approximately 11% from 12 months ago (Source: Bloomberg). 

Copper has discounted the effects of the lack of structural recovery in the Chinese economy - particularly in the local Real Estate sector - which represents up to 50% of its global demand (Source: Bloomberg).

On the other hand, 2023 witnessed a substantial balance between copper demand and supply, resulting in price compression. 

The year 2024 has opened with a significant change in the scenario. Until a few weeks ago, despite expected growing demand, it was estimated that the current year would be the last characterized by an excess of supply. Today 2024 is poised to be the first year of a copper supply deficit.

Indeed, growing challenges on the production front have materialized in the meantime.

All major producers have revised their guidance downward for 2024. Panama First Quantum managed the fifth-largest copper mine in the world: after lengthy negotiations leading to the renewal of the concession, it was cancelled by the government, a unique and unprecedented case in modern history. Anglo American has cut production by 20% across all metals, from copper to palladium, due to rising extraction costs and complexities associated with production processes and their sustainability. A similar choice was announced by Escondida in Chile (-10%).

In this delicate context, the deficit in 2024 could rapidly increase if the Chinese market were to contribute more to demand, or if an economic cycle recovery were to materialize. The growth in demand for key raw materials, such as copper, is indeed strongly correlated with global GDP growth in the long term. Assuming a global GDP growth of 2%, Wood Mac estimates that copper demand could grow by over 4% annually for the next decade.

Looking beyond 2024, at Plenisfer we think that the supply of copper is likely to remain limited due mainly to the complexities and risks involved in starting new mining projects and the low expected return on the investment required to start them up.

Among the risk factors, there is the uncertainty - political, regulatory, and fiscal - that characterizes the countries where extraction sites are typically located (from the Republic of the Congo to Peru). Moreover, these Countries often suffer from the lack of adequate infrastructure (water, energy, transportation), and increasing constraints, especially on the ESG front.

ESG has become an absolute priority in the sector: the mining industry has a history of environmental issues ('E'), challenging relations with local communities ('S'), and corporate governance matters ('G'). The industry has focused for years on improving ESG-related performance, working towards reducing the environmental impact of extraction and processing operations, and investing in the local communities of mining districts. Today, the mining industry is perceived as part of the ESG solution, as it provides the minerals necessary for the energy transition.

Looking at the financial sustainability of projects, it should be underlined that the commencement of a new extraction site does not generate any cash benefits for years and reduces the ability to return capital to shareholders. The increase in costs and timelines for developing new mines has raised the target price of copper needed to generate a return above the typical rate of 15%: the target price is currently around $12,000 to $13,000 per ton, a value well above the current market prices. With the current copper price, companies are likely to prefer using cash flows to provide a return on capital rather than investing in new mines.

Only an increase in prices can convince companies to initiate new projects, necessary to meet the growing demand for copper. However, the price will need to rise substantially to incentivize supply or disincentivize demand, ensuring market equilibrium.

The price is therefore the mechanism capable of correcting the current structural market imbalance. At Plenisfer, we expect it to experience cyclical highs and lows but to trend upward in the long term, reaching the target price of $12,000 to $13,000 per ton. Therefore, we remain optimistic about the prospects of this strategic commodity.




This analysis relates to Plenisfer Investments SGR S.p.A. (“Plenisfer Investments”) and is not a marketing communication relating to a Fund, investment product or investment services in your country. This document does not constitute an offer or invitation to sell or buy any securities or any business or enterprise described herein and does not form the basis of any contract.

Any opinions or forecasts provided are accurate as of the date specified, are subject to change without notice, do not predict future results and do not constitute a recommendation or offer of any investment product or service. Past performance does not predict future returns. There can be no assurance that an investment objective will be achieved or that there will be a return on capital. This analysis is addressed exclusively to professional investors in Italy pursuant to the Markets in Financial Instruments Directive 2014/65/EU (MiFID). It is not intended for retail investors or US Persons, as defined in Regulation S of the United States Securities Act of 1933, as amended.

The information is provided by Plenisfer Investments, authorized as a UCITS management company in Italy, regulated by the Bank of Italy - Via Niccolò Machiavelli 4, Trieste, 34132, Italy - CM: 15404 - LEI: 984500E9CB9BBCE3E272.

All data used in this analysis, unless otherwise indicated, is provided by Plenisfer Investments. This material and its contents may not be reproduced or distributed, in whole or in part, without the express written consent of Plenisfer Investments.



Plenisfer Investments SGR S.p.A.
Via Niccolò Machiavelli 4
34132 Trieste (TS)


Via Sant'Andrea 10/A, 20121 Milano (MI)
+39 02 8725 2960


Contact us at




VAT n. & Tax ID: IT 01328320328

Belonging to Generali Italian VAT group: 01333550323

Registered to The National Compensation Fund


Please read the KIID as well as the Prospectus before subscribing. Past performance is no indication of future performance.

The value of your investment and the return on it can go down as well as up and, on redemption, you may receive less than you originally invested.

© Copyright Plenisfer Investments onwards 2020. Designed by Creative Bulls. All rights reserved.