Ann: Woodlawn Production Restart Study - NPV increases by 37%, page-285

livewirmarkets.com.au N. Pashlas Antares Equities 7.5.24 provided many detailed reasons why price of Cu is expected to rise much further, from now to 2028 at least. Bodes very well for DVP ie

. continuing decarbonisation in most advanced western countries, of course

. big increase in AI adoption, & expansion of the concomitant Data Centres- which require much more power from the grid.

. "...building electrification. Building electrification involves the replacement of gas as the energy source for space and water heating, an incentive structure which exists under the Inflation Reduction Act (IRA)".

. shortfalls in Cu supply- & many major producers have, in recent qtrs, downgraded their Cu production , by c. 620kt pa, in a market of 25mt pa

. " Its no secret that over the last several years China has pivoted away from its traditional source of growth, being property development (due to the HUGE oversupply- my words) to higher value add sectors such as auto, solar cells and wind turbines...

investment continues at pace in other sectors that are less steel intensive but perhaps more base metal intensive, ie copper".

. "Over the last 8 years [Cu] inventories in March have never been this low.

While Chinese grid demand is expected to continue growing it is when the mega-trends of decarbonisation and AI are overlayed that demand for copper takes another surge higher".

Figure 4: Apparent copper inventory (LME, SHFE, Shanghai Bonded)

Source: Bloomberg, Morgan Stanley, Antares Equities; April 2024"

Putting it all together

A few months ago, looking at supply and demand models would have shown a modest surplus of a few hundred thousand tonnes in 2024 before moving into a modest deficit over the 25/26 period. This has now changed.

The missing supply of ~620kt coupled with higher demand (not only from the structural drivers spoken about here but also from the cyclical upswing in growth the world seems to be enjoying currently) have come together sooner than expected. 2024 is now expected to be a meaningful deficit".

Figure 5: Copper concentrate deficit forecasts

Copper concentrates deficit continues to grow

Source: CRU, Fastmarkets, ING Research; 2024

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