Posted on 02/28/2023 12:31:49 PM PST by Red Badger
KEY POINTS:
* A copper deficit is set to inundate global markets throughout 2023, fueled by increasingly challenged South American supply streams and higher demand pressures.
* Copper is a leading pulse check for economic health, and the red metal’s squeeze could be an indicator that global inflationary pressures could worsen, and subsequently compel central banks to maintain their hawkish stances for longer.
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A copper deficit is set to inundate global markets throughout 2023 — and one analyst predicts the shortfall could potentially extend throughout the rest of the decade.
The world is currently facing a global copper shortage, fueled by increasingly challenging supply streams in South America and higher demand pressures.
Copper is a leading pulse check for economic health due to its incorporation in various uses such as electrical equipment and industrial machinery.
A copper squeeze could be an indicator that global inflationary pressures will worsen, and subsequently compel central banks to maintain their hawkish stance for longer.
“We’re already forecasting major deficits in copper to 2030,” said Wood Mackenzie’s Vice President of Metals and Mining, Robin Griffin. He attributed it largely to ongoing unrest in Peru and higher demand for copper in the energy transition industry.
“Anytime there’s political unrest it has a whole range of effects. And the obvious one … is the potential for mining sites to have to close,” he added.
Unrest in Peru
Peru has been rocked by protests since former President Pedro Castillo was ousted in December in an impeachment trial. The South American nation accounts for 10% of the global copper supply.
Glencore announced Jan. 20 it was suspending operations in its Antapaccay copper mine located in Peru, after protesters looted and set fire to its premises.
Additionally, Chile — the world’s largest copper producer which accounts for 27% of global supply — recorded a year-on-year decline of 7% in November.
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“Overall we believe Chile will likely produce less copper from 2023 to 2025,” Goldman Sachs wrote in a separate note dated Jan 16.
However, one market watcher cautioned against getting too caught up in the headlines.
“It’s typical to see disruptions and I don’t think we’re necessarily seeing any more than normal,” said Timna Tanners, managing director at Wolfe Research, who forecasts that 2023 should see an increase in several new mines.
Copper futures settled at $4.035 per pound on Monday, according to CME data. The metal hit a low of $3.9930, its lowest level since Jan. 10 when it traded as low as $3.9875.
Coping with copper consumption
The reopening of China and growth in the automotive and energy transition industry have stoked demand for the red metal, putting further strain on copper resources.
“China’s reopening has a major impact on copper’s price as this improves [its] demand outlook and will push copper prices even higher due to the supply shortage, at the back of the clean energy transition which makes mining harder,” said Tina Teng, market analyst at CMC Markets.
Beijing’s rollback of stringent zero Covid policies are expected to quicken the country’s economic recovery, as well as pent-up Chinese demand. Commodity prices have seen strong gains since December when China announced plans to lift a slew of Covid measures.
“The deficit may last till a potential global economic recession caused by the current headwinds, by 2024 to 2025,” Teng added, forecasting that by then, copper prices might double.
However, Tanners from Wolfe Research said she’s not expecting a “huge spurt” of activity and consumption of copper as China hums back to life.
“Copper consumption in particular really didn’t slow down in 2022. Factories were still running, government stimulus and infrastructure was still chugging along,” she explained.
However, she added that the broader electrification phenomenon will likely be a bigger fundamental driver for copper demand.
“You can’t see electric vehicles take off before you get the charging infrastructure, and the electrification [which is] necessary, is actually much more copper intensive.”
Copper features heavily in electricity-related technologies, and by extension energy transition proposals.
Sales of electric cars in 2021 more than doubled to bring the total number of EVs in the world around 16.5 million, according to the International Energy Agency. That means the EV-charging ecosystem will have to be ramped up.
“There’s a longer term issue around the supply of copper in the energy transition [industry], because the growth in both the automotive and transmission is going to be huge,” said Wood Mackenzie’s Griffin.
That’s a reminder to buy copper coins. Precious metals web sites are selling it for around $1.50-$1.60 oz. Right now. I’m not talking pennies, but newly minted coins and bars of .999 pure copper.
https://www.jmbullion.com/copper/copper-bars/
Just one example…
Time for Musk to get serious about asteroid mining
I remember the 1970s, when Aluminum was beginning to replace copper, till there were problems with expansion rates between copper and aluminum. Aluminum was abandoned.
Libtards can’t get enough open pit miming
They should relocate to an asteroid and leave us alone
Not completely.
High tension tower lines are still aluminum, with a steel line in the core....................
Time to go scraping. Start at EV Charging stations.
Right up the road in Warrington PA two tweakers, a boyfriend and girlfriend, tried to steal the copper from a transformer they though was shut down. The guy cut into live copper and proceeded to burn alive in front of girlfriend. She called 911. By the time the authorities arrived and PECO shut down the power he was nothing but a charred black mess.
I know one that does exist and can be re-opened if they wanted.
Thee largest known deposit of float copper in the world.
Masses that are over 90% pure copper.
The White Pine Mine still open?
Well, I guess I’d better stock up on Berry’s Bullets ... again.
Cool..wait till 2030 and we’re good.
I got a shxtload of pennies though!!
train wrecks?
Copper mines?
...seems we read about this somewhere...
Large masses of metallic copper can be difficult to mine, if it is an underground mine. They can be tough even in an open pit.
But mining has become extremely political in the last 50 years.
How much rock/waste would have to be moved per ton of copper is very important.
precious metals in crisis?
Copper, lead, and brass.
CNBC?
Not good weather vane.
CNN es Muy Estúpido
Another one on people cutting off the charging cables at electric vehicle charging stations to sell the copper in them!
https://freerepublic.com/focus/f-news/4134614/posts
So in 2030 is new copper going to come here from another planet?
There is still significant amounts of copper to be mined from the Upper Peninsula of Michigan. Just awaiting price point economics. And yes, there a re a lot of politics involved in permitting such mining.
No.
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