Copper news.

A report frrom Barry Fitzgerald from the BMO Florida metals conference and the chatter about the copper price.

***********************************************************************************
Talk of imminent copper shortage dominates global metals conference


With copper stockpiles down to just days, the BMO conference in Florida was abuzz with chatter of a looming price spike. This could have big ramifications for leveraged juniors like Caravel and Coda.
Posted on March 9th, 2023 . Updated on March 9th, 2023 by Barry Fitzgerald
Despite all the economic gloom around the place, copper has worked its way back to more than $US4/lb.
It’s a big performance when it is remembered that the red metal averaged $US3.57/lb in the second (December) half last year after having sunk as low $US3.18/lb in the first half.
The price remains well short of the record $US4.87/lb briefly achieved in early March last year before succumbing to recession fears because of the start to inflation-fighting interest rate rises.
This week’s reclaiming of $US4/lb has been attributed to a lower US dollar in response to Federal Reserve chair Jerome Powell toning down previous hawkish comments on future interest rate rises.
But there is more than that to copper reclaiming $US4/lb, remembering that it is a historically high level regardless of last year’s $US4.87/lb peak.
China’s re-opening from COVID is a major factor in copper’s rebound. And disruptions to productiohn at a number of mines across Latin America is another factor.
But more than that is a key message that emerged from the recent BMO Metals, Mining and Critical Markets conference in Florida, which is attended by all the big miners.
The message was that there is a real shortage of copper. That has shown up in warehouse data where stockpiles are down to days of consumption rather than weeks, all at a time when the world’s copper-intensive decarbonisation through electrification is growing hand over fist.
On top of that, the capex commitment to new mines is at a 20-year low and the industry’s cost base is under pressure from falling grades and deepening mines.
The long-term fix to the growing supply challenge is higher prices. Whether the push through $US4/lb heralds the start of bull run in copper remains to be seen.
Most observers have in fact been suggesting prices could weaken in the next couple of years as some new mines reach full production. But there is broad agreement that at the very least, prices will take off in the back half of the decade as the long-run supply challenge takes hold.
But that is not what came out of the BMO conference. The view there was that a long-run deficit in supply is forming now and it could take $USUS4.50/lb to $US6.80/lb copper prices to fix it.

whilst we wait for production this could play out well.
Good luck to us.