Copper set to plummet towards the $7,500 mark – SocGen

Strategists at Société Générale expect copper prices to continue to correct through the end of this year. The base metal could fall as low as $7,500.

See: Copper to struggle at current levels, waiting for strong catalysts – ING

Commodity supercycle headlines are weakening

“Our bearish $9,500/t forecast for the current period has been reached, and we expect the downward trend to continue and to average $7,500/t in 1Q22, before stabilising around $8,000/t.”

“The bullish momentum and sentiment around talk of a super-cycle, energy transition and green fiscal stimulus are fading. We expected the long liquidation by money managers to occur, helping prices to correct and the market mood to turn less bullish.”

“Sadly, we expected risk-off sentiment induced by the Delta and other worrying variants, such as Mu, to persist longer than strike actions, thus the medium-term outlook for copper is strongly to the downside.”

“Our upside price risk scenario, for example, with more strikes in Latin America, has copper prices rising $1,500/t above our base-case forecast.” 

“The downside risk, brought about by further supply chain disruptions due to new variants, would see prices fall $1,000/t below our base-case outlook.”