Interview, Webinar
Copper is the New Oil
- The global copper market is projected to face a supply crunch similar to the 2000s oil market, with the sector described as completely unprepared for a demand boom due to a lack of new mine investment, evidenced by no new major projects approved in the last 12 to 18 months.
- Forecasted copper prices are expected to follow a progressive trajectory, averaging $12,000 per ton in 2022, rising to $14,000 in 2024, and reaching $15,000 thereafter, with mid-to-mid-high teens prices considered possible by the middle of the decade to address balance tightness.
- Market dynamics anticipate a deep deficit in the current year and into 2022 with inventories falling to very low levels by mid-2022, followed by a modest surplus in 2023 and mega-sized deficits emerging in 2024 and 2025.
- Green copper demand is projected to rise from approximately 1 million tons in 2021 to 2.5 million tons by the mid-decade (representing 8% to 9% of local demand) and nearly 6 million tons by the end of the decade (accounting for 20% of global demand), driven by policy shifts in the US, Europe, and China.
- The long-term supply gap is projected to exceed 8 million tons (nearly 40% of market size) ten years out, the largest shortfall in market history, requiring very high prices and an incredibly high price signal to stimulate the necessary investment shift.
- While a surge in mine investment is expected to begin within the next year or so, industry management teams indicate no current plans for new large-scale greenfield projects, and copper scrap supply is expected to increase by nearly 4 million tons (a 50% rise), which is insufficient to close the gap without increased mining capacity.
- Traditional industrial demand is expected to drive trends for the next 12 to 18 months, while the demand environment transitions from being China-centric to a broader global thematic where US and European policies are as critical as those in China, with China representing only a third of green demand growth and the US and Europe each accounting for a quarter.
- A multi-year bull market is anticipated starting now, with the market entering the first year of this cycle, though current prices are viewed as insufficient to generate growth as mining capital expenditure remains at half the levels of the late 2000s.
- Policy developments in Brussels, DC, and Beijing are expected to feed into growth and capital flows within the next six months, while a potential "green premium" for copper may emerge over time as consumers differentiate based on production carbon footprints.