{"id":700,"date":"2024-02-07T01:01:28","date_gmt":"2024-02-07T01:01:28","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/02\/07\/when-will-copper-go-up\/"},"modified":"2024-02-07T01:01:28","modified_gmt":"2024-02-07T01:01:28","slug":"when-will-copper-go-up","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/02\/07\/when-will-copper-go-up\/","title":{"rendered":"When Will Copper Go Up?"},"content":{"rendered":"

Copper is the third most-used metal in the world, and experts believe demand for this important commodity will rise in the coming years on the back of a tight supply situation.<\/strong><\/p>\n

For that reason, market watchers may be asking, \u201cWhen will copper go up?\u201d The general consensus is that higher copper prices are needed for mining companies to invest in copper production and exploration.<\/p>\n

\u2018The average age of the world\u2019s top 10 mines is 95 years old,\u201d said Jamie Keech of Vida Carbon during a copper-focused panel at the 2023 Vancouver Resource Investment Conference. \u201cThey\u2019re getting deeper every year, they\u2019re getting lower grades every year and they are getting more expensive to mine every single year. And most of those are located in Chile and Peru, areas that are increasingly volatile from a political and social perspective.\u201d<\/p>\n

Copper\u2019s supply\/demand imbalance sparked a record-breaking rally in 2021, pushing prices to an all-time high of US$10,724.50 per metric ton (MT) \u2014 a record that the metal broke in March 2022, when it hit US$10,730.<\/p>\n

<\/small><\/p>\n

20 year copper price chart.<\/em><\/p>\n

<\/small><\/p>\n

Chart via <\/em>Federal Reserve Economic Data<\/em>.<\/p>\n

Prices for copper had pulled back to about US$8,000 by mid-August 2022 on growing fears of a global recession. In early 2023, copper prices mounted a campaign to breach the US$9,300 level, once again giving market watchers a reason to believe highs for the metal would soon to be retested. <\/p>\n

However, that reason soon faded as rising interest rates dampened the outlook for copper-dependent industries across the global economy. With the demand picture unclear, copper couldn\u2019t hold above the US$9,000 level. Since then, the price of copper has slid, reaching US$7,910 as of early October 2023.<\/p>\n

Is the optimism of an impending bull market for the red metal still warranted? Let\u2019s look at the current supply and demand factors that could influence copper prices to the upside.<\/p>\n<\/div>\n

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Green energy in driver\u2019s seat for copper demand <\/h3>\n

Copper\u2019s many useful properties have translated into intense demand for the base metal from a diverse range of industries. Construction and electronics have long been the main drivers for copper demand, and with a conductivity rating that\u2019s second only to silver, it\u2019s no wonder copper is also an ideal metal for use in energy storage, electric vehicles (EVs) and EV charging infrastructure.<\/p>\n

Energy storage may prove to be one of the most copper-intensive markets in the 21st century. According to a 2022 report on the future of copper by S&P Global Market Intelligence, \u201cThe rapid, large-scale deployment of these technologies globally, EV fleets particularly, will generate a huge surge in copper demand.\u201d<\/p>\n

The firm is projecting that global refined copper demand will nearly double from 25 million MT in 2021 to about 49 million MT in 2035. Energy transition technologies are expected to account for nearly half of that demand growth. \u201cThe world has never produced anywhere close to this much copper in such a short time frame,\u201d the firm notes in its report.<\/p>\n

China is the world\u2019s largest consumer of the metal, and unsurprisingly its zero-COVID policy wreaked havoc on its economy and demand for copper. When China ended that policy in early 2023, it contributed to the boost seen in copper prices at the time. <\/p>\n

The Chinese government\u2019s Made in China 2025 and China Standards 2035 initiatives include spending US$1.4 trillion on copper-heavy infrastructure programs, such as 5G networks, industrial internet, inter-city transportation and rail systems, ultra-high-voltage power transmission and EV charging stations.<\/p>\n

Outside China, the EV market represents a growing global source of demand for copper now and into the future. As the Copper Alliance has noted, EVs can use three to four times as much copper as an internal combustion engine passenger car.<\/p>\n

Automakers are making large investments in growing their EV production capacity, with some even looking to secure copper supply. In February 2023, McEwen Copper, a subsidiary of McEwen Mining (TSX:MUX,NYSE:MUX), received a US$155 million investment from Stellantis (NYSE:STLA), the fourth largest carmaker in the world.<\/p>\n<\/div>\n

<\/span><\/p>\n

Watch the full interview with <\/em>Rob McEwen and Michael Meding<\/em> above.<\/p>\n

\u2018This is the first occasion where an original equipment manufacturer, a carmaker, has invested in a copper situation directly,\u2019 said Rob McEwen, chairman and chief owner of McEwen Mining. \u2018They\u2019ve done it in lithium and nickel, but this is the first time they\u2019ve come into copper.\u2019<\/p>\n<\/div>\n

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Companies struggling to keep copper supply coming <\/h3>\n

Of course, demand is just one side of the story for copper prices. For more than a decade, the world\u2019s largest copper mines have struggled with steadily declining copper grades and a lack of new copper discoveries.<\/p>\n

The alarm bells have been ringing for a few years now. In a mid-2020 report, S&P Global Market Intelligence Analyst Kevin Murphy painted a \u201cdismal\u201d picture for copper mine supply. He stated that out of the 224 copper deposits discovered between 1990 and 2019, a mere 16 were discovered in the last decade. These circumstances have led to questions about whether peak copper is here.<\/p>\n

The COVID-19 pandemic further exacerbated challenges in the global copper supply chain as both mining and refining activities in several top copper-producing countries were slowed or halted altogether. The economic uncertainty also led miners to delay further investments in copper exploration and development \u2014 a complicating factor given that it can take more than 15 years to develop a newly discovered deposit into a producing mine.<\/p>\n

Supply instability out of the world\u2019s largest copper-producing countries, Chile and Peru, has also weighed heavily on the market in the past few years. Together, they represent a combined 40 percent of global output.<\/p>\n

In Chile, some of the world\u2019s biggest copper miners, including BHP (ASX:BHP,NYSE:BHP,LSE:BHP) and Anglo American (LSE:AAL,OTCQX:AAUKF), are facing royalty rate increases due to a tax reform bill. The country is also dealing with water woes as drought intensifies, causing tension for miners who rely on water to pump copper to the surface, as well as during the smelting and concentration process.<\/p>\n

To the north in Peru, copper miners have been nervous about the ongoing sociopolitical unrest in the form of mining protests brought on by the impeachment and jailing of former President Pedro Castillo.<\/p>\n

However, BNN Bloomberg reported that the country is expected to increase its copper production by 200,000 MT in 2023 compared to 2022, when the nation produced 2.4 million MT. Peruvian Prime Minister Alberto Otarola told a gathering of industry stakeholders and insiders in September that Peru\u2019s mining sector is \u2018essential for development of our country\u201d and emphasized that his government \u2018won\u2019t allow the country to fall into chaos and disorder.\u201d Nevertheless, Peru\u2019s central bank has forecast that mining investment in the country is expected to decline by 18 percent in 2023 and another 8 percent in 2024.<\/p>\n<\/div>\n

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Bull market for copper or bust? <\/h3>\n

Together, strong demand and tight supply can create the right market environment for higher prices.<\/p>\n<\/div>\n

<\/span><\/p>\n

Watch the full interview with Joe Mazumdar above.<\/em><\/p>\n

\u2018While I can\u2019t predict demand, even if it\u2019s flat, the supply\u2019s not there. That\u2019s what I know,\u2019 he said at the 2023 Prospectors & Developers Association of Canada convention. \u2018That\u2019s what you can put your hat on, because you know that from discovery to basically production the average time is 15 to 18 years.\u2019<\/p>\n

So when will copper go up?<\/p>\n

S&P Global Commodity Insights has released its copper market forecast for the 2023\/2024 period, and it\u2019s calling for prices to average US$8,596 in 2023 and US$8,602 in 2024. While analysts at the firm see robust demand, especially out of Asian markets, they are anticipating a supply surplus in the short term. <\/p>\n

The Bank of America has given a higher estimate, saying it sees potential for copper prices to reach US$8,788 for 2023. The bank is concerned about the impact that slower activity in China, rising interest rates and the possibility of a global recession will all have on copper. Yet its analysts are hopeful that the red metal\u2019s role in cleaner energy generation will provide a much-needed layer of support for copper prices. <\/p>\n

\u2018We prefer copper among the base metals, partially because the green revolution has offset the demand drag from housing and increased policy support in China should push the metal higher,\u2019 states the Bank of America.<\/p>\n

For its part, in its Citi Global Market Copper Book 2023, Citigroup (NYSE:C) is projecting further ahead to a copper price of more than US$12,015 by 2025. <\/p>\n<\/div>\n

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.<\/strong><\/p>\n<\/p>\n

This post appeared first on investingnews.com<\/div>\n","protected":false},"excerpt":{"rendered":"

Copper is the third most-used metal in the world, and experts believe demand for this important commodity will rise in the coming years on the back of a tight supply situation. For that reason, market watchers may be asking, \u201cWhen will copper go up?\u201d The general consensus is that higher copper prices are needed for […]<\/p>\n","protected":false},"author":0,"featured_media":701,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-700","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/700","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=700"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/700\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/701"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=700"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=700"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=700"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}