Top producer Antofagasta’s shares were up 4% on Monday morning in the LSE, while Lundin Mining was up 3% in Toronto.
Click here for an interactive chart of copper prices
Aluminum is surging and iron ore jumped to a fresh high as commodities advance toward the highs of the last supercycle.
The US recovery is accelerating and President Joe Biden’s $2.25 trillion infrastructure plan will highlight sectors like electric cars, driving further gains in commodities critical to the green energy transition. That’s coming alongside a continued economic boom in China, where a push to reduce emissions is filtering through to supply cuts for some metals just as demand is picking up.
Goldman Sachs said recently copper price can surge to $15,000 by 2025. The bank believes annual demand for copper will surge 900% from current levels to 8.7 million tonnes by 2030.
“Ripple effects into non-green channels mean the 2020s are expected to be the strongest phase of volume growth in global copper demand in history,” Goldman said in a note.
“The copper market is unprepared for this critical role.”
“The super part of the copper supercycle is happening right now,” Max Layton, managing director for commodities research at Citigroup Global Markets told Bloomberg.
“The bullish outlook is decarbonization-led, and I’m totally onboard with that for the next three to four years, but the super part of this cycle is actually more related to the scale of global stimulus.”
Still, risks to the industrial rally are building in the short term. A rise in coronavirus cases and new variants threaten to derail reopening plans in some regions such as India, while investors are concerned about a possible pullback in Chinese stimulus.
“Prices could become overly extended for industrial uses,” Xiao Fu, head of commodities strategy at BOCI Global Commodities told Bloomberg.
“I’m not in the $15,000 copper camp. There will be some automatic stabilizers before we approach those kinds of levels, and there will be some demand adjustment,” Xiao.
“And let’s not forget: the pandemic is not over, and cases are still surging in many parts of the world.”
Port workers in Chile, which accounts for about a quarter of the world’s copper supply, called a strike for Monday in response to President Sebastian Pinera’s move to block a bill allowing people to make a third round of early withdrawals from their pension funds.
The threat of covid-19 in nations in South America could hamper the export of key industrial commodities like iron ore and copper, said Gavin Wendt, senior resource analyst at MineLife Pty.
(With files from Bloomberg)
