In its latest Base Metals update, Cormark Securities upped its forecast for long term copper prices from $2.75 to $3 per pound, citing concerns over supply.
The firm admitted that it might seem counterintuitive to put in bullish predictions now, when copper prices are low and oversupply is apparent, but it argued that higher prices will be needed to sustain the industry within the next few years.
"While it may seem counterintuitive to undertake an upward revision to our long-term price deck now in a period of oversupply and low prices, we believe the retrenchment in capital spending and lag from discovery to production is setting up for the next cycle," the firm stated, adding that it saw stronger copper prices within the next few years.
Cormark isn't alone in arriving at that thesis. Thomson Reuters is predicting a $7,073 incentive price for new copper production, while a number of the world's largest mining companies have made comments about placing their bets on copper.
And although some are more bearish on copper, there are plenty of arguments in support of a copper supply crunch.Visual Capitalist recently published an infographic on the subject, noting the importance of copper in power grids, cars and renewable energy:
However, it also pointed to longer lead times to develop projects: