COPPER (LME) Copper Market Deficit by 2025

Originally posted by Clark888 ↑

Francisco Blanch, head of global commodities and derivatives research at Bank of America, is very bullish on copper. “We think we could go as high as US$20,000 a ton if the supply of scrap copper doesn’t make it to the market," he told Bloomberg TV.

Video is 6 minutes 18 seconds long.

Copper tops US$10,000/t but M&A still a dream
Capital discipline has been a mantra that has slowly helped miners earn back market credibility over the past decade following asset purchases at the top of the market during the supercycle, many of which remain undeveloped. Boards are loath to greenlight multibillion-dollar project developments even though there is broad consensus for new projects to be developed, so finding money for acquisitions to fill empty pipelines is still a tall order.

In the past, most companies viewed US$3.50/lb as the incentive price for new copper developments. The copper price is now >US$1/lb above that and companies are still sitting on their hands. If companies truly believe copper prices will remain above US$3.50/lb into the medium-term or even longer-term, that should spur development action and M&A too.

However, geopolitical issues make project development and M&A decisions more challenging now than in the past as even safe, dependable countries such as Chile and Peru are having their investment credentials shaken.

Australian copper developers, like Havilah who has a sizeable and scalable copper deposit called Kalkaroo in the mining-friendly jurisdiction of South Australia, look like they have the best leverage with a rising copper price.

Cheers

These are only my thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.

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In the past, most companies viewed US$3.50/lb as the incentive price for new copper developments.

If companies (i.e. the C Suite and/or BoD) truly believe copper prices will remain at US$3.00/lb longer-term (see Tweet above), then that will neither spur development action or M&A.

Goldman Sachs believes that the green revolution is likely to create a record wide copper supply gap by 2030, as not many big new copper projects are coming on stream.

My bet, the C Suite and BoD will wake up and smell the copper coffee as their companies copper reserves are depleting.

Decarbonisation means a massive increase in demand for copper and other resource sector commodities to facilitate the increase in electric vehicles and solar and wind power generation.

Governments are mandating for a rapid shift to EV's.

This is a multi-decade event.

As RFC Ambrian put it 2 years ago, Copper M&A: the Cupboard is Nearly Bare. See Post#: 41974288

The momentum is up. Demand is escalating. Supply looks like it is coming under pressure.

IMO, there is no ceiling for copper prices.

Cheers

These are only my thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.