Fitch Ratings confirmed on Tuesday it has upgraded its nickel and copper spot price forecasts as a tight market faces potential supply disruptions and increased demand.

The price assumption review reflects increased post-pandemic demand, short-term supply disruptions due to the Russia-Ukraine war, and their role in global decarbonisation, the company added.

The new copper LME spot price forecast for 2022 increased to $9,500 per tonne, which is $1,000 higher than the previous assumption. In 2023, prices should rise $500/t to average $8,500/t, Fitch says. During 2024-24 prices are expected to be unchanged at $7,500/t, but the long-term forecast was increased by $300/t to $7,000/t, Kallanish reports.

That’s because copper is a key metal for electrification and the energy transition and there are risks to medium- to long-term supply. Fitch explains the current changes come amid very low global stocks, a balanced market, current and potential supply disruptions due to water stress in Chile and protests in Peru.

New legislation proposals in both countries are expected to increase taxes and slow investments in copper mining, which in turn will limit supply growth. On top of that, sanctions may affect the availability of Russian products. The country accounts for 4% of global mined and refined copper, according to Fitch Ratings.

Forecast for this year’s average nickel (LME spot) price rose $4,000 to $20,000/t; increased $3,000/t to $17,000/t in 2023; and remained unchanged at $15,000/t for 2024-25. These adjustments come from strong demand from the battery EV sector and supply risks exacerbated by sanctions on Russia, which accounts for roughly 7% of total nickel supply and 15% of Class 1 nickel.

Fitch expects the long-term nickel spot price to be kept at $15,000/t as new supply from Indonesia comes online.

On Tuesday, the LME nickel spot price was trading at $31,580/t and copper was at $10,172/t.