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Strategists at ANZ Bank believe demand recovery, president-elect Biden’s supportive foreign policy, prospects of additional fiscal support and American and Chinese climate policies are key factors shaping the industrial metals demand in 2021. Therefore, the outlook for copper is constructive.

Key quotes

“We expect support from supply issues to diminish next year, with demand driving market tightness. Better economic activity will be key to supporting demand growth. China’s infrastructure investments and strategic restocking are keeping demand strong, while a growing focus on the green energy sector should keep investor sentiment high. 

“Chinese demand for copper will be the dominating factor in 2021. Recent months have seen strong growth in sales of consumer goods and automobiles, and China’s infrastructure and grid investments have driven strong growth in demand, providing a solid base for 2021. 

“We estimate global copper demand will increase by 4% YoY to 23.6mt in 2021 versus a contraction of 3.8% this year. The European Green Deal favours metals demand. It plans to target renewable energy, as well as an EV fleet of 13 million by 2025 to be supported by a million public charging stations. The US’s Biden administration plans to invest USD2trn in renewable energy infrastructure.”

“Geopolitics could normalise, relatively speaking, in 2021. The president-elect has at least confirmed that the US-China relationship, which has been a key risk for all the metals since 2018, will not worsen. With accelerating economic growth, rising demand from new energy sector and limited geopolitical risk, copper prices could push towards USD9,000/t over 2021.”