Copper summary: From Stock Head Big admission by BHP during the...

Copper summary:
From Stock Head

Big admission by BHP during the week that it too can make mistakes when it comes to forecasting the direction of commodities.
BHP’s mea culpa was on nickel. All nice and rosy on the outlook for the steel and battery making material throughout 2023, our biggest miner says it was shocked as anyone by the metal’s recent price collapse.
It took solace though in mentioning that it was not alone in getting it wrong on nickel, saying it had framed its nickel outlook commentary based on its own market intelligence, and that gleaned from 20 private-sector forecasters who in January this year were predicting nickel would average a little more than $US19,000/t.

And here we are with nickel back at a little more $US16,000/t and with little to no prospect of the situation changing much until the end of the decade. The local industry is on its knees, including BHP’s own Nickel West business.

Garimpeiro is big enough to give BHP and its team of commodity price forecasters another chance. They have a long history of getting it right over being wrong like the low-rent forecasting types Garimpeiro usually relies on.

So it was with great interest that Garimpeiro notes that in the commentary on the outlook for commodities that accompanied the release of BHP’s $US6.6 billion December profit report during the week, the industry leader was decidedly bullish on copper.
The red metal has been a solid performer in recent times. Nothing spectacular but when stacked against the likes of lithium and nickel, it has been solid all right.

It averaged $US3.75/lb in the December half which was up 5% on the first half of the 2023FY. In its commentary on the metal’s performance BHP substituted solid for “lack of volatility.’’
But change is in the air, with lots of good reasons to think volatility to the upside in the copper price is coming down the tracks. Read BHP’s take on copper and the rest of the commodities on its website.

In a nutshell when it comes to copper, BHP reckons that the supply deficit in the metal previously expected to emerge in the final third of the 2020s, could well come earlier.
What’s more, the supply deficits could be “pronounced’’ in BHP’s words in the medium–term (five years).