Goldman Sachs says the "Dr Copper" bull market is "just beginning" to hit new all-time highs

Copper hit a fresh seven-year high on Tuesday, buoyed by strong economic data from Asia, but amid a backdrop of undersupply and strong demand, Goldman Sachs said the bull market was "just beginning" and could break $10,000 and set a new all-time high.

The world's most important industrial metal, copper, is on the first leg of a bull market that could lead to record prices in the future, Nicholas Snowdon, an analyst at Goldman Sachs, said in a report released Today.

Copper prices fell sharply earlier in the year, hitting a low for the year in March, but have rallied since, rising more than 20 percent this year, partly because of a sharp rebound in Demand from China.

The spectacular rise in copper prices has also sent share prices of leading producers soaring, with Glencore having doubled from its march low and Freeport-McMoran up almost 400 percent from its trough.

The market is heavily supplied and copper prices are expected to top $10, 000  Goldman Sachs analyst Snowdon said the refined copper market is facing its worst supply shortfall in a decade, with a projected supply shortage of 327, 000 tons next year and 153, 000 tons in 2022

In order to stimulate new supply and balance the market, Snowdon believes copper prices need to rise significantly and could break through $10,000 in the future."We see copper testing its 2011 record of $10,162 very likely in the second half of 2022."

Goldman raised its 12-month copper price target to $9,500 a tonne from $7,500 and expects copper prices for 2021 and 2022 to continue to move higher, averaging $8,625 and $9,175 a tonne, respectively.

Demand for copper has surged in the "green economy".On average, electric cars contain more than three times as much copper as internal combustion engines.Copper is also used in wind turbines to connect renewable energy to the grid.

Jefferies, the Wall Street bank, estimated in a recent report that even in a "bear market", cumulative copper demand over the next decade from wind, solar (000591 shares) and electric vehicles could be equivalent to more than half of global demand in 2020.

Increasing supply comes at a time of growing demand, and large, high-grade copper mines are increasingly hard to find.Only one large copper mine has been discovered since 2015 and new copper projects take at least seven to 10 years to develop."