The Upcoming Major Bull Market: Copper’s Time to Shine

Glencore’s aggressive pursuit of Canada’s Teck Resources has put a spotlight on the race to secure access to copper.


Historically considered a cyclical economic indicator, copper is now also positioned to play an essential role in the global green transition—accelerated by recent legislation, including the U.S. Inflation Reduction Act (IRA), passed last year. Green technologies such as electric vehicles and solar panels require more copper than their fossil-fuel-based counterparts, and supply growth is expected to fall significantly short of demand in the next decade.

In early to mid-2023, China’s sluggish property recovery and worldwide economic challenges may limit copper’s upside, currently trading around $8,500 per metric ton. However, the long-term outlook tells a different story.

The Upcoming Major Bull Market: Copper's Time to Shine

U.S. demand, which has long been overshadowed by China’s, is now taking center stage. The Inflation Reduction Act (IRA) provides substantial tax credits and other support for clean-energy projects, including wind farms, batteries, solar, and hydrogen. Goldman Sachs estimates that between 2023 and 2030, it could increase average annual demand by around 180,000 metric tons, or about 1% of current global consumption. The bank notes that “green” copper demand now accounts for 7% of global consumption, up from just 4% in 2020, and is expected to contribute to 47% of total demand growth between 2023 and 2040.

However, current investment plans may fall significantly short of meeting this demand. A February McKinsey report projected global copper demand of 36.6 million metric tons by 2031, primarily driven by the green transition, compared to a supply of only 30.1 million metric tons. Goldman’s April report is even more optimistic, suggesting 2030 demand could reach 40 million metric tons.

Additionally, there are a few bullish trends for supply growth, mainly related to politics. Under the IRA, for example, EVs must use batteries with a certain percentage of their “critical minerals” sourced from the U.S. or a country with a free-trade agreement with the U.S. Copper is not currently on the list of critical minerals, but some researchers and politicians, including senators from key states like Arizona and Georgia, are advocating for its inclusion.

The goal is to wrest control of the clean power minerals supply chain from China. A Brookings Institution report last year indicated China’s share of refining capacity at 73% for cobalt, 68% for nickel, 59% for lithium, and 40% for copper. China has also been directly buying up mineral assets worldwide, particularly lithium, to fuel its vast greentech industry.

A more fragmented supply chain will increase costs for all, especially during the early stages of the green transition. However, higher material prices will stimulate investment. While mineral processing is the primary bottleneck, this likely implies more upstream mining investment, particularly as the IRA will require many battery minerals to be both mined and processed in the U.S. or countries with U.S. free-trade agreements.

A key uncertainty lies in the U.S. Congress, with Republicans’ opening move in the debt-ceiling battle including a demand to undo parts of the IRA.

Assuming the law remains intact, the U.S., China, and Europe will all aggressively work towards greening their economies over the next decade. The world will require much more copper to achieve this goal, especially if global supply chains continue to fragment.,This article is an original creation by If you wish to repost or share, please include an attribution to the source and provide a link to the original article.Post Link:

Like (0)
Previous May 2, 2023 1:20 pm
Next May 3, 2023 10:47 am

Related Posts

  • Understanding Stagflation: Why It’s Such a Terrible Economic Situation

    Stagflation is a term that has been used to describe a period of economic downturn that can have devastating consequences. It is a situation when the economy is stagnant, meaning that economic growth is not happening, yet inflation is still occurring. This can be a recipe for disaster, as it can lead to rising unemployment, reduced consumer spending, and increased economic hardship. In this article, we will discuss what causes stagflation, the negative impact it can have, and how to combat it. What Causes Stagflation? Stagflation occurs when the demand…

    January 26, 2023
  • The Versatility and Importance of Zinc in the Metal Market

    Zinc is an essential metal used in many industries such as construction, transportation, and electronics. It is a widely available and versatile metal that has unique characteristics that make it an attractive target in the metal market. In this article, we will explore what makes zinc an unique target in the metal market. Abundance: Zinc is the 24th most abundant element in the Earth’s crust. It is found in minerals such as sphalerite, wurtzite, and smithsonite. The largest reserves of zinc are found in Australia, China, and Peru. Its abundance…

    February 22, 2023
  • Navigating Inflation: Understanding Its Impact and Protecting the Middle Class

    Introduction to Inflation Inflation is the sustained increase in the general level of prices for goods and services in an economy over time. When the price level rises, each unit of currency buys fewer goods and services, effectively eroding the purchasing power of money. Inflation is usually measured as the annual percentage change in the Consumer Price Index (CPI) or the Wholesale Price Index (WPI). Causes of Inflation There are several factors that can contribute to inflation, such as an increase in demand for goods and services, a decrease in…

    March 30, 2023
  • Exploring the Potential of Emerging Markets in 2023

    The global economy is in the midst of a major transformation, and emerging markets have become a key focus for investors in recent years. As the US economy continues to expand, and other countries of the world struggle with low growth, many are turning to emerging markets for potential opportunities. In this article, we’ll explore the potential of emerging markets in 2023, and what factors may impact their performance. Will Emerging Markets Shine in 2023? It’s no secret that emerging markets have been underperforming for some time now. However, there…

    January 21, 2023
  • Navigating the Storm: Understanding and Overcoming the 2023 Commercial Real Estate Crisis

    In the ever-evolving economic sphere, the onset of the 2023 commercial real estate (CRE) crisis presents a challenging conundrum for investors and economists alike. This seismic shift has seen dramatic fluctuations in property values and rental returns, jeopardizing the financial stability of the entire real estate sector. The root cause of this crisis is multifaceted. Many are quick to point to the lingering effects of the COVID-19 pandemic, which has accelerated the trend of remote working, thus reducing demand for office spaces. Meanwhile, the rise of e-commerce has displaced the…

    May 20, 2023
  • How bad would it be if the U.S. fails to raise its debt limit?

    How bad would it be if the U.S. fails to raise its debt limit? The U.S. Congress has an important decision to make in the coming weeks: whether or not to raise the federal debt limit. This is a crucial decision that could have lasting effects on the nation’s economy, political system and global reputation if it’s not handled properly. But what does it really mean if the U.S. fails to raise its debt limit? In this blog post, we will explore this question and what the potential consequences could…

    February 2, 2023
  • Navigating the Storm: What the US Debt-Ceiling Battle Means for Your Money

    The United States government has been facing a constant battle over the debt ceiling for many years now. The debt ceiling is a limit that Congress sets on the amount of money that the government can borrow. When the government needs to spend more than it receives in revenue, it borrows money by issuing Treasury securities. However, once the debt reaches the limit set by Congress, the government can no longer borrow money and must either reduce its spending or default on its debts. This battle over the debt ceiling…

    February 21, 2023
  • Navigating the Approaching Debt Ceiling: Strategies for Avoiding Default and Preventing a Financial Crisis

    The United States has been facing a significant debt crisis in recent years, with the national debt approaching $31.4 trillion as of Jan 2023. One of the most pressing issues in this crisis is the approaching debt ceiling, which is the limit on the amount of debt the government can incur. The debt ceiling has been a contentious issue for decades, with lawmakers frequently raising it to avoid defaulting on the country’s debt. However, with the debt ceiling fast approaching, it is crucial that steps are taken to avoid defaulting…

    January 23, 2023
  • Understanding the Inverted Yield Curve: Its Causes, Significance and Impact on the 2023 Economy

    An inverted yield curve is a situation in which the interest rates on short-term Treasury bonds are higher than the interest rates on long-term Treasury bonds. This phenomenon is significant because it is often seen as a leading indicator of an impending recession. One reason why an inverted yield curve may occur is that investors believe that the economy will slow down in the future, causing them to demand higher interest rates on short-term bonds as compensation for the increased risk. Additionally, the Federal Reserve may raise short-term interest rates…

    January 21, 2023
  • Potential Impact of a Japanese Government Bond Crisis on the Banking Sector and Stock Market

    The stability of a country’s financial system is crucial for its economic growth and development. In recent years, concerns have been raised about the potential risks associated with Japan’s high levels of government debt. In this article, we will explore the hypothetical scenario of a crisis in Japanese government bonds and examine the possible consequences for Japan’s banking sector and stock market. By understanding the potential ramifications of such an event, investors, policymakers, and financial institutions can better prepare for and mitigate the risks associated with a sudden shift in…

    April 7, 2023

Leave a Reply

Your email address will not be published. Required fields are marked *