ASX shares with exposure to copper are in the spotlight following a bullish outlook for the price of the red metal from Goldman Sachs.
With the broker tipping copper prices will hit new all-time highs in 2023 as demand exceeds supply, copper stocks could be set for some fresh tailwinds.
There are more than a dozen ASX shares exploring for and digging up copper.
Sticking to the biggest three we have:
- Oz Minerals Limited (ASX: OZL), with a market cap of $9.2 billion
- Sandfire Resources Ltd (ASX: SFR), with a market cap of $2.4 billion
- Aeris Resources Ltd (ASX: AIS), with a market cap of $366 million
So, why is Goldman forecasting a surge in prices?
Why might copper prices hit new all-time highs in 2023?
As The Australian Financial Review reports, Goldman has revised its forecast for the copper market in 2023 from the previous 169,000 tonne surplus to its new expectations of a 178,000 tonne deficit.
The bullish revision, certainly to be welcomed by ASX shares producing copper, is based on both supply and demand dynamics.
On the supply side, Goldman expects reduced output from Chile, a major player in the copper space.
On the demand side, China's reopening as it moves away from its economy hampering COVID zero policies should see a significant boost from the world's top copper importer. Copper is also widely used in the construction and green energy sectors, both of which Goldman sees powering ahead in 2023.
Copper prices previously hit all-time highs on 4 March this year, at US$10,670 per tonne. ASX copper shares, as you'd expect, rallied over that period.
New record prices would help support ASX copper shares
That March 2022 record will be broken in 2023 if Goldman is correct, with the broker forecasting the red metal to hit US$11,000 per tonne next year.
Commenting on that forecast, Nicholas Snowdon, metals strategist at Goldman Sachs said (quoted by The AFR):
The sequential increase in policy targets and commitments to green transition, alongside a minimal supply response so far… have resulted in earlier and larger open-ended deficit conditions that essentially are already here, not beginning at some point in the future…
Another deficit in the market next year will take fundamental conditions to an unprecedented extreme in terms of tightness.
In longer-term good news for ASX shares hunting for and producing copper, Goldman Sachs forecasts copper prices to remain strong, averaging US$12,000 per tonne in 2024.
Below you can see how the big copper shares have been tracking.
