A nice article on where the experts believe copper is headed....

A nice article on where the experts believe copper is headed. This recent news only makes PXX more attractive.

Copper prices hit US$9000/t last week, an 11-month high, prompting hopes the metal’s time has finally comeSome analysts have called for prices to hit new records in 2025But equities haven’t moved yet and these 10 cheap copper explorers are worth less than $20m

Is it finally happening? The copper boom propelled by the energy transition has been longer in its gestation than bullish market commentators had hoped.

Stalled by a general macroeconomic bloodbath, it’s now almost three years since the red metal hit all time highs of around US$10,700/t in May 2021.

That came amid calls the commodity could become the ‘new oil’ thanks to its centrality to the rollout of renewables and electric vehicles.

To summarise, cars were once a marginal source of demand for copper. But EVs require a lot more wiring than internal combustion engine cars, and that means there’s four times as much copper per automobile.

Renewables are great at providing cheap electricity when the sun is shining and the wind is blowing. But unlike the large centralised thermal generators around which most electricity grids have been designed, renewables are smaller in scale and need to be built where the resource is best captured.`

That means a rerouting of electricity grids requiring a massive roll out in interconnectors, poles and wires to connect dispersed generators to homes and businesses. You know what that means? More copper baby.

We’re someway from the exuberant mood that saw Goldman’s copper obsessed commodities lead Nicholas Snowdon say in 2022 that even US$100,000/t copper could be possible (his previous ultra-bullish projections had suggested prices could rise to US$15,000/t).

But there has been a string of supply traumas — highlighting the tenuous position of an industry facing a doubling of demand to 50Mtpa by 2050 yet stumped by its struggles to lift supply as mines get deeper and lower in grade – and both government approvals and social licence are getting harder to obtain.

The unexpected shuttering of First Quantum’s Cobre Panama mine late last year — around 3.5% of global supply — has flung what was going to be an oversupplied 2024 market into a significant deficit.

Experts say much higher prices will be needed to incentivise replacement production and brownfields expansions.

And last week we got the first sniff of the potential as copper rose 6% to more than US$9000/t after Chinese refineries, losing money due to overcapacity, agreed to production caps in the face of decade low treatment and refining charges. Prices slid 1.2% to US$8977/t on Tuesday.

That has analysts tipping big price rises. Goldman is less bullish than it was a couple years ago, having called the copper boom a tad early. It sees a healthy US$10,000/t in 12 months.

Australia’s Shaw and Partners, meanwhile, thinks the commodity will surge to US$11,000/t by 2025, having ratcheted up its expectations in February.

Bank of America has floated the idea copper could hit US$15,000/t, having flagged in December that new renewable energy targets could boost demand by an additional 4.2Mt to 2030.

This is all great for the current producers like Sandfire Resources (ASX:SFR), but the real gains will be made as money flows to the juniors at the bottom end of the market.