Bank of America Predicts Strong Copper, Weakening Iron Ore, Steel

Bank of America forecasts that copper prices will remain strong through 2025 due to high demand, restricted supply, and increased investment in energy transition projects. Meanwhile, demand for iron ore and steel has declined because of reduced consumption in key sectors such as construction.

In 2024, copper prices have risen by 6% year-to-date, driven by tight mine supply and refining challenges. Investments in energy infrastructure, such as grid expansion for decarbonization, have further boosted demand. Conversely, iron ore is experiencing reduced demand, particularly from China’s property sector, where consumption has dropped from 50% in 2010 to 20% in 2024 due to a government crackdown on speculative investments and a slowdown in housing construction.

Bank of America also notes a decline in steel production. Although demand from sectors like machinery has increased, it has not been sufficient to counter the construction downturn. “With a projected surplus of 190Mt or 7.5% of total supply, for next year, prices may fall below US$80/t. This could either lead major miners to cut back on supply or force higher-cost operations, particularly in China, out of the market,” analysts warned.

Threats to Copper Supply 

As Western countries aim to diversify their sources of critical raw materials, including copper, experts warn that this strategy could backfire if they fail to address the 8.6Mt gap that a shift away from China would create. 

Another threat to copper supply is climate change, which disrupts rainfall patterns. Verisk Maplecroft’s Extreme Precipitation Index reveals that 19% of copper mines are already at significant risk from extreme weather, a figure expected to rise as global temperatures increase, leading to more severe rainfall and droughts. “Health and safety risks to workers, damaged access roads, and electrical and structural damage at site facilities can all impact production,” says Jimena Blanco, Chief Analyst, Verisk Maplecroft. These impacts also extend to local communities and supply chains. Verisk Maplecroft advises mining operations to strengthen their emergency response plans and resilience strategies to mitigate current and future climate risks, as reported by MBN.