The world’s copper supplies saw major disruptions last summer, as drought and production delays in top producer Chile hampered output of the material crucial to energy transition. Most investors seem to believe these constraints are in the past, and expect production to add 10% to pre-disruption levels, aided by the delayed opening of a massive new mine in Chile as well as restarts in Peru and Democratic Republic of Congo. That would push copper into surplus territory for 2024.

Copper demand is on track to double from 2022 to 2035, driven by the transition to a lower-carbon economy. Copper is crucial for electrifying the transportation sector and producing renewable energy.

But Morgan Stanley Research Commodity Strategists have a different take: “We think [copper output] disruption is here to stay. Rather than a glut, we expect a deficit of 340 kilotons this year alone. This disparity should show up in pricing by Q2, with prices in London hitting our bullish target of $9,000/tons, or roughly 8% higher than 2023.”

With futures prices for the physical commodity at historically higher levels than spot prices, investors may look to potential equity opportunities, and specifically miners with strong prospects for volume growth and operational improvement like Southern Copper Corp. (SCCO), Glencore PLC (OTC: GLNCY), Freeport-McMoRan Inc. (FCX) and Rio Tinto Group PLC (RIO).