A few days ago this article came to my attention.
Pierre Andurand is a commodities trader of some note. He has speculated, based on how long it takes to get new copper mines into production and that currently companies, like BHP, prefer to go down the M&A path to grow copper assets rather than risk long timeframes and a great degree of capital to grow copper assets.
See article below
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Copper prices will extend records and surge another 288% in the coming years, top trader says
Filip De Mott
May 25, 2024, 12:40 AM GMT+10
YegoroV/Shutterstock
- Top commodity trader Pierre Andurand expects copper to reach $40,000 a ton in the next four years.
- Copper is already seeing a huge supply-demand imbalance that will only deepen, he told the FT.
- He says mining production is not keeping up, and firms will have to start opening new mines.
Copper prices at records are only a taste of what's to come, says top commodities trader Pierre Andurand.
In an
interview with the Financial Times, the hedge fund manager projected that the red metal could catapult to $40,000 a ton within just a few years. That's a 288% surge from its current price of $10,290 as of Friday.
Copper is already sitting near record highs, so any quadrupling from current levels would mean a prolonged series of fresh records. The metal breached $11,000 a ton just this week, as markets respond to an unmatched supply-demand imbalance.
This market distortion can only get deeper, Andurand said, as green policy, artificial intelligence, and fracturing global relations all amplify a need for copper:
"We are moving towards a doubling of demand growth for copper due to the electrification of the world, including electric vehicles, solar panels, wind farms, but also military usage and data centers," he said.
At the same time, copper production is hitting a wall, as both new and existing projects fail to keep up. It's bad news for a depleting inventory; last year, global copper supply hit its
lowest seasonal level since 2008. The limited supply is also seen pushing the price up.
According to Andurand, relying on current mines will not be the solution to this, although it does seem to be the industry's favored strategy right now. Acquisitions are becoming a go-to among mining firms who want more copper exposure, recently illustrated by
BHP's bid to takeover Anglo American.
The supply-demand imbalance is the same thesis for why commodities expert Jeff Currie expects higher prices, though his projection is nowhere near Andurand's — Currie expects copper to hit
$15,000 in the coming years, and has called it "the most compelling trade" he's ever seen.
"I think we could end up to $40,000 per ton over the next four years or so," Andurand said. "I'm not saying it will stay there then; eventually we will get a supply response, but that supply response will take more than five years."
That's likely on account of how long it takes to open a new mine, which typically requires 15 years, FT reported. But firms will take years to shift away from M&A, as supply concerns are only now coming up, Currie separately told Bloomberg last week.
(20min delay)