The AFR has realised there is shift in Copper:
Copper eyes $US10,000 as ‘super squeeze’ intensifies
Alex Gluyas. Apr 23, 2024 – 1.35pm
Copper is headed to $US10,000 a tonne as traders ramp up bets that miners will struggle to adequately increase supply to meet booming demand for the industrial metal.
The rally boosted ASX copper producer Sandfire Resources to a record $9.34 on Monday.
Copper climbed as much as 1.1 per cent to $US9988 a tonne, settling 0.2 per cent lower at $US9853 a tonne, near its two-year high.
"We’re seeing some green shoots in the global industrial cycle and so an upswing in metals demand seems to be under way,” said Paul Bloxham, HSBC’s top commodities economist.“The supply side of many commodities is very constrained, so we’re in this global commodity super squeeze and copper is certainly part of that story.”
Indeed, supply issues have continued to tighten the physical market since the shutdown of First Quantum’s Cobre Panama mine late last year. The mine, which represents around 1.7 per cent of global supply, is expected to be idle until at least mid-2025.
Since then, big producers including Rio Tinto and Anglo American have released softer-than-expected guidance for 2024, with the cumulative curtailments taking more than 5 per cent of global production offline
Challenges to electricity supply for some mines in Zambia are also putting more production at risk.
Sustained tightness in the copper concentrate market has dragged treatment charges, meaning the fees paid by miners to smelters for processing concentrate, near all-time lows at $US10 a tonne. “This is likely to tighten refined copper supply, with smelters curbing production,” said Daniel Hynes, senior commodity strategist at ANZ.
Lately, prices have been buoyed by an escalation of economic sanctions, with the US and UK implementing fresh trading restrictions on Russian aluminium, copper and nickel. Prices initially spiked on the sanctions, which prohibit the delivery of newly produced Russian metals to the London Metal Exchange and the Chicago Mercantile Exchange.
At the same time, demand is building for use in decarbonisation applications and artificial intelligence compels data centres to increase capacity. That dynamic has caused a flurry of major brokers to upgrade their price forecasts. Citi tipped prices could rocket to more than $US15,000 a tonne over the next few years, while Morgan Stanley projected they would average $US12,000 by 2026.
Concerns about supply and a recovery in demand for raw materials have caused investors to rotate back into commodities, with Bank of America’s latest global fund manager survey reporting a record jump in allocations to the sector.
Much of that shift has been driven by a growing interest in copper, with gross long positions in the metal increasing 105 per cent this year, according to RBC Capital Markets.“Speculative interest in expressing long-term conviction in copper with clear supply deficits and growing electrification-related demand has continued to drive the copper price higher,” RBC’s mining and materials equity team wrote this week.
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