Goods production delivered surprisingly resilient base metals demand in 2020, supported by ex-China fiscal stimulus and China’s investment-led drive. 2021 should see growing demand from an ex-China recovery, especially as vaccination begins, while China will seek to expand its recovery beyond manufacturing while avoiding derailing this sector. A long-term structural change to metal demand recently accelerated as Japan and South Korea pledged carbon neutral targets by 2050, and the US may be nudged the same way following the election. Copper and aluminium demand should rise with greater electrification, while nickel depends on prevailing battery technology, which can change rapidly.

We lift our copper price targets above $3/lb across the forecast period as we no longer believe the copper market is well-supplied over the medium-term. We believe copper is in deficit this year, partly due to buying of perhaps 750kt by China’s State Reserve Bureau. With stronger global consumption across the forecast period, we expect a supply deficit of 200kt of copper in 2021 and a tight market in subsequent years to support elevated +$3/lb prices, which should incentivise new mines.