Worried about your resources portfolio in 2024?Here’s the good...

Worried about your resources portfolio in 2024?Here’s the good news from Sprott’s market strategist Paul Wong and ETF product manager Jacob White, who are predicting a better year for copper and exceptional times for uranium, gold and silver.In a mid-January note Wong and White said the new renewable energy/EV-led commodity supercycle would continue to boost metal consumption again in 2024.

Like 2023, increased supply could lead to modest surpluses but geopolitical factors – like mining disruptions and resource nationalism — could undermine these surpluses quickly.Political tensions in general will play a huge role in metals markets this year, according to Wong and White.“Geopolitical tensions appear set to rise, especially with a slew of critical elections in 2024 (over 60 countries and more than half of the world’s population will be going to the polls),” they say.“…with well-known and large-scale risks like escalating Middle East tensions, the Russia-Ukraine war, China’s property market crisis and tensions with Taiwan, and the U.S. national election, the safe haven attributes of precious metals may become more attractive.

” COPPER: ‘Risk of a sudden price surge’The copper market fluctuated throughout 2023 but ultimately maintained its value and closed the year up 1.19% at $3.84/lb, say Wong and White.“Despite economic challenges, copper demonstrated remarkable resilience compared to other commodities like lithium and nickel,” they say.In 2024, the robust outlook for growth in copper demand contrasts starkly with the supply side.“Notably, despite plans for increased production, Codelco, the largest copper miner in the world, is experiencing its lowest production levels in 25 years,” the say.“This predicament is exacerbated by the simultaneous global decline in ore grades, intensifying the supply challenges.”Increasing production disruptions also exacerbate the gap between supply-demand.

“These disruptions historically hovered around 5% of supply, but the ratio has risen with recent events,” say Wong and White.“Most notable was the shutdown of a significant mine in Panama which alone accounted for 1.5% of the global copper mine supply.“Elsewhere, operational issues have led Anglo American to curtail its copper production.”Collectively, these disruptions have tilted the copper market from a projected slight surplus to an impending deficit for the year 2024, they say.“There is a minimal buffer in inventories that heightens the risk of a sudden price surge should buyers make large drawdowns to secure supplies,” say Wong and White.“The possibility of more accommodative macroeconomic policy in 2024 further fuels the outlook for copper and creates price opportunities for copper miners.

“There is also the potential for mergers and acquisitions in the industry as many large miners prioritize copper as a strategic metal, adding an additional layer of optimism for existing copper miners.”