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.

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.

Author:Com21.com,This article is an original creation by Com21.com. If you wish to repost or share, please include an attribution to the source and provide a link to the original article.Post Link:https://www.com21.com/the-upcoming-major-bull-market-coppers-time-to-shine.html

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

Related Posts

  • More Upside Potential for Cocoa: El Nino’s Impact on Global Production

    Introduction: In the world of commodity investing, few stories are as compelling as the one currently unfolding in the cocoa market. Cocoa, the key ingredient in our beloved chocolate, has been facing a series of challenges, and the latest twist in the tale comes in the form of El Nino. In this blog post, we’ll explore why cocoa may have more upside potential ahead, driven by the looming El Nino event and its potential impact on global production. El Nino’s Return: El Nino, a climate phenomenon known for its disruptive…

    September 27, 2023
    0
  • Global Copper Shortage Could Last Till 2030

    According to analysts, a global copper deficit is expected to affect the markets throughout 2023 and potentially last for the rest of the decade. The current shortage is being driven by challenges in South American supply streams and rising demand.Copper plays a crucial role in measuring the economic health as it is widely used in various applications, including electrical equipment and industrial machinery. A shortage of copper may signal a worsening of global inflationary pressures, leading to a prolonged hawkish stance by central banks.Robin Griffin, Vice President of Metals and…

    February 7, 2023
    0
  • Outlook for Wheat Prices in 2023: Analyzing Key Factors

    Wheat prices are a critical component of the global food and agriculture industries, with fluctuations affecting both producers and consumers worldwide. In 2023, the outlook for wheat prices remains uncertain, with a range of positive and negative factors influencing the market. One major factor affecting wheat prices in 2023 is the global demand for food and animal feed. As the world’s population continues to grow, demand for wheat as a staple food source is expected to increase, driving up prices. Additionally, the growing demand for animal feed made from wheat…

    February 7, 2023
    0
  • The Importance of Copper Price to the Global Economy: Analysis, Investment Targets, and Considerations

    Copper is one of the most important industrial metals in the world. It is used in a wide range of applications, from construction to electronics to transportation. The price of copper has been closely monitored by investors and economists alike, as it is considered a leading indicator of economic growth and activity. In this article, we will examine why copper price is so important to the economy and how it can predict and react to economic fluctuations. Why is Copper Price So Important? Copper is widely used in industrial applications,…

    February 22, 2023
    0
  • El Niño’s Embrace: Unraveling Its Impact on Global Commodities

    As weather patterns continue to astonish the world, a term frequently thrown around in the meteorological arena is “El Niño.” With the recent announcement from the World Meteorological Organization (WMO) highlighting a 90% probability of El Niño continuing through the latter half of 2023, questions arise on its implications for commodities. Let’s dive into understanding the phenomenon and its consequential ripple effect on global commodities. Understanding El Niño The El Niño Southern Oscillation (ENSO) is a pivotal oceanic-atmospheric event rooted in the irregular variations of surface water temperatures in the…

    August 18, 2023
    0
  • 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
    0
  • Against the Grain: Harvesting Crews Tackle Drought and Delays in Crucial Wheat Crop Season

    In the sprawling wheat fields of Sharon Springs, Kansas, waves of golden wheat fall rhythmically under the combine operated by Laura Haffner. The wheat fields, covering 320 acres in this far-west region, are some of the most bountiful she has seen this season – a stark contrast to the devastating impacts of the years-long drought predicted to produce one of the poorest wheat crops in the country’s history. A break in the drought occurred unexpectedly in May, with heavy rains extending into July. Although this was a welcome respite for…

    July 18, 2023
    0
  • Outlook for Corn Prices in 2023: Key Factors to Watch

    Corn prices have been in the spotlight in recent years, with market fluctuations and demand changes affecting the global food and fuel markets. In 2023, the outlook for corn prices remains uncertain, with both positive and negative factors affecting the market. One major factor affecting corn prices in 2023 is the global demand for food and biofuels. As the world’s population continues to grow, demand for corn as a food source is expected to increase, driving up prices. Meanwhile, the increasing use of corn for biofuels is also expected to…

    February 7, 2023
    0
  • Weathering the Storm: The Impact of Adverse Conditions on Corn and Soybean Investments

    The agriculture markets, particularly corn and soybeans, are currently being whipped by the winds of a “weather market.” A potent combination of widespread dryness and blistering heat across major growing regions has thrown the possibility of top yields out the window. Despite hopes for improved conditions, the prospects remain slim without substantial rainfall. This persistent hot and dry weather leaves crops vulnerable, creating a volatile trading environment ripe with speculation and leading to significant rallies in corn and soybean prices. Corn and Soybeans: A Withering Tale Crop conditions across the…

    June 21, 2023
    0
  • Copper To Shine: Analyzing The Commodities Market For 2023

    As the global economy continues its healing process in 2023, investors are increasingly looking to commodities as a hedge against inflation. Copper is one of the most promising of these commodities, with analysts predicting that it will outperform most other metals by the end of the year. Read on to discover why copper could be set to shine in 2023 and how to capitalize on it in your portfolio. Introduction to the Commodities Market The commodities market is full of opportunity for those who know how to read it. For…

    February 1, 2023
    0

Leave a Reply

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