Bank of America is forecasting bullish prices for copper. Analysts are forecasting that the price of copper will be above $10,000 per tonne in 2025 thanks to global decarbonization efforts.
With the world focused on reducing their carbon footprint, more money will be spent on developing clean energy technology. Additionally, forthcoming rate cuts from the U.S. Federal Reserve could help prop up demand as well.
“Manufacturing activity should stabilize as the Fed cuts rates, so we maintain our constructive copper view into 2025,” noted Bank of America analysts.
Copper is a key industrial metal lauded for its electrical conductivity. With the world focused on emissions reduction, this could drive demand for more electricity and thus push copper prices higher.
Other tailwinds for higher copper prices relate to the lack of supply. Copper mining company BH Group made light of supply constraints as big tech companies become more ambitious with their artificial intelligence plans. As such, this will require more electricity to power AI technology platforms.
“The growth of data centers and AI could boost global copper demand by 3.4 million tonnes a year by 2050, the Financial Times cites BHP’s CFO Vandita Pant,” the aforementioned Yahoo! Finance report said.
“Pant told the FT that BHP Group expects global copper demand to reach 52.5 million tonnes annually by 2050, up 72% from 2021,” the report added.
2 Copper Exposure Options
Given this strong growth trajectory for copper, investors can look to copper miners for exposure. One option is the Sprott Copper Miners ETF (COPP), which tracks the Nasdaq Sprott Copper Miners Index (NSCOPP).
The index tracks the performance of a selection of global securities in the industry. This includes producers, developers, and explorers that support the industry. Overall, COPP provides blanket exposure to this mining industry, focusing on large-, mid-, and small-cap mining companies.
For investors seeking an even stronger growth trajectory, small-cap companies can also offer additional potential when the copper skews toward the upside. Again, investors can look to copper miners to help appease rising demand, but with a focus on small-caps. With that, consider the Sprott Junior Copper Miners ETF (COPJ).
COPJ is ideal for investors who want to focus on even more aggressive growth prospects with small-cap exposure. The fund aims to provide investment results that track the total return performance of the Nasdaq Sprott Junior Copper Miners Index. The index incorporates mid-, small-, and micro-cap companies entrenched in copper-mining-related businesses.
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