ASX copper shares have seen plenty of ups and downs over the last 12 months. But, next year could see a more positive year if the copper price rises.
In 2022 there was a deterioration in the copper price. That's despite some other commodities having a strong run such as lithium. While copper isn't involved with energy generation, it is playing an important part in the decarbonisation of the world. Copper is used in electricity cables.
Despite the recovery of the Sandfire Resources Ltd (ASX: SFR) share price in recent weeks, it's still down by 17% for the year.
There has been a prediction that next year could be good for the copper price, which could help copper miners including Sandfire, BHP Group Ltd (ASX: BHP) and Aeris Resources Ltd (ASX: AIS).
It may previously have been a help for the OZ Minerals Limited (ASX: OZL) share price too, but it has accepted a takeover offer from BHP.
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Optimistic call on the copper price
According to reporting by CNBC, Bank of America commodity strategies think that the copper price could rally to US$12,000 per tonne in the second quarter if things go well.
However, the circumstances that could be required for that rally include the US Federal Reserve pivoting to a "less aggressive" monetary policy tightening, "limiting upside in the US dollar, and for demand to remain supported as the planned energy transition accelerates."
Commodity strategist Michael Widmer said in Bank of America's 2023 metals outlook report:
Notwithstanding the macro headwinds, physical markets have remained tight, highlighting the lack of spare copper units available at present.
CNBC reported that the analyst pointed to the demand for copper being resilient. Up to this point in 2022, copper purchases are higher this year than last year. In the rest of the world outside of China, copper demand is at a record. Widmer continued:
Taking this a step further…China's grid spending has offset weakness in the wider economy: indeed, building out the electricity infrastructure has completely offset weakness in the housing market.
CNBC noted that the analyst wondered whether this is a one-off or the start of a structural trend. Widmer said that over the past year and a half there has been a break in the correlation between global copper demand and industrial production growth. Widmer concluded:
In our view, this confirms to some extent that green spending has already supported global copper demand and physical markets.
Bank of America data suggests that copper demand could grow by 4.5% year over year to 2030. That compares to demand growth of 2.1% over the past two decades.
Foolish takeaway
Higher demand could be very helpful for the copper price in the shorter term. Higher profit could then be a boost for the share prices of these ASX copper shares. How much of a boost? Time will tell, and it could depend on how the copper price performs. It's also possible things won't go as well as the optimistic view of Bank of America.
