# A case for copper?



## rederob

In the BHP thread ducati is presenting a case for the irrelevance of electric vehicles (EVs) and hybrid electric vehicles (HEVs) on the copper market.

EVs and HEVs are very different creatures.
EVs do not have a conventional internal combustion engine (ICE) – the electric motor substitutes for it completely.
HEVs have an electric motor and an ICE (albeit smaller as it generates electricity for the electric motor.

Using ducati’s own (10 year old) data for EVs, the substitution effect of an ICE for an electric motor adds between 9 and 16 kilograms (ducati uses 20lbs to 35lbs).

Globally there are upwards of 500 million cars on the road.  
What would happen if we had to convert all of them to EVs within 20 years because fuel/oil was too expensive?

If we assumed every kilogram of copper from existing cars could be recycled then we would need at least an extra 4500 million kilograms of copper just to service this scenario.  
Dividing this evenly over 20 years (for simplicity sake) means we would need 225 million kilograms of extra copper each year to make EVs.  The good news is that the global stockpile of copper at LME, Shanghai and Comex warehouses is presently about 226 million kilograms (although over 10 million kilograms is already committed).
So, we can accommodate year one of the EV scenario.
What do we do in year two?
Will the global copper stockpile increase faster than it is depleted, and give us some breathing space?
Perhaps.

Unfortunately EVs are presently subservient to HEVs in the manufacturing stakes.
US consensus data suggests HEVs require twice as much copper as cars with ICEs only.  (In the BHP thread ducati has not been able to discern the difference between EVs, HEVs and total copper use as wiring plus copper alloy materials.  This is important as, for example, HEVs don’t just have an electric motor and ICE, they also have a generator and a converter, plus supplementary wiring unique to HEV systems.)

Toyota is the global leader in manufacture of HEVs, and since introducing its Prius in 1997 has managed to produce just over one million HEV units (inclusive of others in its HEV fleet range eg Rav 4s).  
Clearly, the move to HEVs and EVs is not going to happen quickly, and converting 500 million cars over the next 20 years would be a production challenge of mammoth proportions.
But wait, there’s more.
Industry analysts reckon there could be a billion cars on the road in 20 years time.  Yes, believe it or not, the challenge will not just be to convert the status quo to EV/HEVs, it’s to accommodate global growth in car ownership, especially from emerging nations.

Quickly back to the HEV calculations.
In the BHP thread I used US data.
The average US car contains over 25 kilograms (copper Development Association states 27.4kg in 2006) of copper (wiring and alloys).
HEVs are estimated to require double that amount, with lower end vehicles (with less electronic gadgetry) requiring upwards of 50% more copper than present average.
Thus, we are looking at HEVs requiring between 12 kilograms and 25 kilograms more copper per vehicle.
Going back to ducati’s EV number of 9 kilograms (or 20 lbs as he prefers), we see HEVs consuming at least 3 kilograms more – a 33% increase.

Given the present copper stockpile could barely accommodate a 9 kilogram increase per car spread evenly over 20 years, it will struggle with a further 33% increase in demand.

The above has been kept deliberately simple for demonstration purposes, but remains conceptually feasible in the longer term.

The challenge for those continuing to believe that EV/HEVs are going to be irrelevant to future copper demand/supply is to prove that the combined effects of recycling and ICE substitution are negligible.


----------



## Smurf1976

It's not just copper IMO. Once we get to the point where the petrol (as distinct from oil) supply starts to seriously fall then it's basically game over for petrol engine manufacturing. The engines we already have will need most of the available fuel. Once that happens, I'm fully expecting a late 90's internet style technology mania as car manufacturers struggle to produce a marketable product.

Trouble is, no matter which option they pursue it needs something that is in short supply. It's not just wiring - what about the materials used to make the batteries etc?

One of the reasons I don't foresee a smooth transition from oil to something else is that we'll keep having problems with not enough this, not enough that and not enough something else to actually build the alternatives.

Wind power? Great. Now about all that steel and fibreglass. And of course the diesel-powered trucks to transport the turbine blades and tower sections to the site. And the diesel-powered crane to put them up. 

Hydro-electricity? Sure. And all that cement is coming from where, exactly? And if you want it built in less than a couple of decades then you'll need diesel-powered bulldozers, excavators, cranes and so on to do the job. And of course trucks to transport the cement and move the rock. Sure, it can be built without these things but it won't be quick.

Nuclear? Well that means we need more uranium and all sorts of other fancy materials that we don't exactly have huge amounts of sitting around right now.

Geothermal? That's an awful lot of new transmission lines we have to build rather quickly and an awful lot of materials needed to build them.

Sure, we have the resouces in the ground to produce cement, steel and so on but there will be a delay in getting that turned into product. And that's the problem since even once you have the product, then you have to build the turbines, reactors or whatever. In an environment where everything will need to be fast-tracked and all possible shortcuts taken anyway, I just don't see it going smoothly.


----------



## YOUNG_TRADER

Shouldn't this also increase lead consumption due to the lead requirements for the engine ie similar to lead batteries?

p.s. I was tempted to vote for the on your bike option : lol


----------



## rederob

YOUNG_TRADER said:


> Shouldn't this also increase lead consumption due to the lead requirements for the engine ie similar to lead batteries?
> 
> p.s. I was tempted to vote for the on your bike option : lol




EV/HEV batteries are mostly NiMH or Lithium-ion - not much lead content in an electric car.


----------



## chops_a_must

rederob said:


> Quickly back to the HEV calculations.
> In the BHP thread I used US data.
> The average US car contains over 25 kilograms (copper Development Association states 27.4kg in 2006) of copper (wiring and alloys).
> HEVs are estimated to require double that amount, with lower end vehicles (with less electronic gadgetry) requiring upwards of 50% more copper than present average.
> Thus, we are looking at HEVs requiring between 12 kilograms and 25 kilograms more copper per vehicle.
> Going back to ducati’s EV number of 9 kilograms (or 20 lbs as he prefers), we see HEVs consuming at least 3 kilograms more – a 33% increase.



Well... in my mind it's not so much the difference in materials per unit that is the issue, but the replacement cost and quantity of materials needed for the outright replacement. As technology improves, the materials needed per unit will obviously lessen, but the amount of materials needed for replacement would still be enormous.




			
				Smurf1976 said:
			
		

> Trouble is, no matter which option they pursue it needs something that is in short supply. It's not just wiring - what about the materials used to make the batteries etc?



I agree. Forget about copper, the biggest impact will be on a lot of the trace metals and precious metals needed for some of these high end applications.

If you are going to argue for an increase in copper demand because of this, you would also have to factor in a drop in demand for aluminium and iron for these products. Iron would no longer be needed for blocks and component parts, and aluminium would no longer be needed for heads.


----------



## rederob

chops_a_must said:


> As technology improves, the materials needed per unit will obviously lessen, but the amount of materials needed for replacement would still be enormous.



At the moment the opposite is true.
Increasing electric and electronic componentry in modern cars is "controlled" through copper wires.  Plus, more and more (small) electric motors are creeping in to give us more and more creature comforts and functionality.
Thinner copper wires will only be available when 42volt architecture is introduced.


----------



## It's Snake Pliskin

rederob said:


> At the moment the opposite is true.
> Increasing electric and electronic componentry in modern cars is "controlled" through copper wires.  Plus, more and more (small) electric motors are creeping in to give us more and more creature comforts and functionality.
> Thinner copper wires will only be available when 42volt architecture is introduced.




Nice comments.
Not to mention copper piping for gas and water etc. 
refridgerators air cons etc. 
Unfortunately in Aus and NZ it is hard to get a perspective on the world due to the population size. Here in japan it is immense the amount of wasted machines etc that are discarded after use. What replaces them? New products and machines - especially cars.

Red,

Do you think copper could be used as an indicator or barometer of future economic growth limits? (I haven't read all the posts)


----------



## rederob

It's Snake Pliskin said:


> Red,
> Do you think copper could be used as an indicator or barometer of future economic growth limits? (I haven't read all the posts)



Snake
Not in our lifetimes - at least not in terms of "growth limits".
Copper remains a good barometer of global industrial production, although all metals have proved cyclical and the copper barometer will fail us at some point.

Given the incredible downturn in US housing, it's surprising that copper has not dipped back into the "dollar" range.  Instead it's still over 3 dollars, and not looking like falling off the perch yet. 
Perhaps that's because Shanghai copper inventories dipped a few thousand tonnes this week, while LME inventories are still meandering below 200k tonnes.

I did notice that this "poll" showed a few "disbelievers", so if any would also like to post their reasons it would be appreciated.


----------



## Whiskers

Copper has pretty well held above US$3.50 for awhile and the following forcasts that we are nearing it's low and expecting to firm over the next year or two.

It says inter alia "Real growth in copper consumption remains very strong, older mines are becoming depleted and grades are declining sharply."

Assuming that the $US will recover some of it's lost ground in that time, and given the firm gold price it looks like bright times ahead for some of our juniour explorers with copper reserves with gold credits, such as GCR that I hold, who has a significant low grade copper gold deposit at copper hill.



> *Copper to $9,000 - upside underestimated*
> _Copper specialists Bloomsbury Mineral Economics believe that we can expect copper prices to reach $9,000 a tonne within the next two years._
> 
> Author: Lawrence Williams
> Posted:  Friday , 05 Oct 2007
> 
> LONDON -
> 
> In a presentation at Mining Journal's 20:20 Copper Day in London, Chris Welch of copper specialist analytical service, Bloomsbury Mineral Economics (BME), made a strong case for copper reaching $9,000 a tonne - $4.08 a pound - by 2009. Given that BME has a great track record on copper price predictions such a prediction should not be taken lightly!
> 
> The premise behind the prediction is that the supply gap is continually underestimated by many analysts and factors which should be built into their pricing models are often excluded. Notably Welch feels that mine production is invariably over-estimated, and the figures also do not take into account the amount of copper or concentrate which is, at any given time, tied up in working stocks, and material in transit and being processed.
> 
> This effectively means that even if, for example, metal production moves into a small surplus, as is possible in 2008, the amount that is actually available to the market is somewhat less than this and helps maintains the copper price at current levels.
> 
> The stock low point is likely to occur late this year, but copper availability is still likely to be in commercial deficit through 2008 and 2009 and may achieve balance in 2010. This is the basis for the BME price prediction of $9,000 copper by the end of 2009.
> 
> This scenario - or at least the general overestimation of copper mine production by analysts - was also commented on by another speaker, Justin Longley of International Copper Resources. He showed a most interesting chart of analysts' predictions against real output which showed a huge divergence, based on figures from Xstrata.
> 
> The point perhaps that both speakers were making is that individual corporate presentations of copper mine supply are frequently heavily overestimated but many analysts may take these as reality without applying a big enough discount for projects which are cancelled, fall behind schedule or for major supply disruptions for technical, political and labour reasons. Real growth in copper consumption remains very strong, older mines are becoming depleted and grades are declining sharply.
> 
> Another interesting point which arose in Longley's presentation was the rate of copper usage per capita in the Asian sector in particular. It was pointed out that growth in Taiwan and South Korea has been very high in relation to the developed nations where the curve was lower because of the existing copper based infrastructure. But in the real growth economies like China and India, this growth pattern has hardly started yet, and should this rise to Korean or Taiwanese levels then the effect on the$ supply/demand pattern could enormous with price development which could make $9,000 copper itself a huge underestimate!



http://www.mineweb.com/mineweb/view/mineweb/en/page36?oid=37927&sn=Detail


----------



## BREND

Why I think copper price will fall:
http://basemetal-trading.blogspot.com/2007/10/copper-will-history-repeat-itself.html

I have been recommending my clients to short copper at $8260 - $8300 if it goes there again .


----------



## >Apocalypto<

BREND said:


> Why I think copper price will fall:
> http://basemetal-trading.blogspot.com/2007/10/copper-will-history-repeat-itself.html
> 
> I have been recommending my clients to short copper at $8260 - $8300 if it goes there again .




Brend your Back!


----------



## BREND

Trade_It said:


> Brend your Back!




Haha, yes. Back from my army reserves training lately.


----------



## BREND

Copper has a strong resistance at $7600 - $7640, obviously somebody powerful is trying to prevent the price from going lower.

A picture means a thousand words, the chart can be found here:
http://basemetal-trading.blogspot.com/2007/10/copper-testing-support-level-again.html

I would think that base metal price will be well-supported for the next few days. Reason being: 

1. yesterday China announced rise in GDP of 11.50% for the 3rd quarter, and 

2. possible rate cut by the Fed next week.


----------



## Whiskers

With copper up 3.6% tonight leading a solid rise in base metals and US markets ticking along nicely this might be the turning point for copper referred to above by Bloomsbury Mineral Economics. 



> The stock low point is likely to occur late this year, but copper availability is still likely to be in commercial deficit through 2008 and 2009 and may achieve balance in 2010. This is the basis for the BME price prediction of $9,000 copper by the end of 2009.


----------



## Dukey

rederob said:


> .....
> Globally there are upwards of 500 million cars on the road.
> What would happen if we had to convert all of them to EVs within 20 years because fuel/oil was too expensive? .....




Thnx for the interesting thread Rederob.

... Just a quick clarification for myself and possibly others - in your original post you mention 'converting' existing cars to EV's or presumably HEV's....  I guess you mean - scrapping existing vehicles and replacing then with new EV/HEV's....  is that right?

- from my limited understanding I would think there is no practical/economical way to convert an existing petrol or diesel powered vehicle to EV or HEV... ??

... though I hope I'm wrong there... as an economical  means of conversion would save a lot of  re-manufacturing costs. 

- Also... how is the Lithium supply travelling?

-Dukey


----------



## rederob

Dukey said:


> Thnx for the interesting thread Rederob.
> 
> ... Just a quick clarification for myself and possibly others - in your original post you mention 'converting' existing cars to EV's or presumably HEV's....  I guess you mean - scrapping existing vehicles and replacing then with new EV/HEV's....  is that right?
> 
> - from my limited understanding I would think there is no practical/economical way to convert an existing petrol or diesel powered vehicle to EV or HEV... ??
> 
> ... though I hope I'm wrong there... as an economical  means of conversion would save a lot of  re-manufacturing costs.
> 
> - Also... how is the Lithium supply travelling?
> 
> -Dukey



'
Dukey
It is technically possible to keep the power train and only change the engine to electric, but that is somewhat impractical.
The full economies of ev/hev are achieved with integration of all the elements, rather than "bolt on".  Also, as ev/hevs evolve, power may be driven on a per wheel basis rather than a powertrain, meaning that chassis structures and car shapes would change markedly.
As for battery (power) requirements, I guess we are in for an interesting ride, as none of the key ingredients are available on the demand level to accommodate 10million ev/hev conversions or new vehicles (within a short time-frame).
My pick would be "cobalt" as a metal play in the battery war as its other uses have already strained supply and its price is presently going gangbusters.


----------



## BREND

According to my Strategy for 2008, one of the commodities that I'm bullish about is copper. My "Strategy for 2008" can be found in my blog.

Rising copper price is going to benefit Southern Copper and Freeport McMoran. I do expect to see higher copper price after Chinese New Year.

Market simply forgotten that the biggest consumer of copper is not America, but its China. There is no evidence to prove that slowdown in US has lead to lower demand for copper in China. As a matter of fact, inventories at Shanghai Futures Exchange have fallen for eight consecutive weeks (to the lowest since February). This shows that China is lacking copper supply, and they need to buy more soon!

Last night copper jumped 5 percent to a seven- week high, leading a commodity rally, on speculation global demand for raw materials won't slacken. 

Copper futures for March delivery gained 15.7 cents to $3.298 a pound at 12:16 p.m. on the Comex division of the New York Mercantile Exchange. 

Earlier, copper reached $3.3165, the highest since Nov. 15. Futures rose 5.9 percent in 2007, rallying for a sixth straight year.


----------



## rederob

BREND said:


> China is lacking copper supply, and they need to buy more soon!
> 
> Last night copper jumped 5 percent to a seven- week high, leading a commodity rally, on speculation global demand for raw materials won't slacken.
> 
> Copper futures for March delivery gained 15.7 cents to $3.298 a pound at 12:16 p.m. on the Comex division of the New York Mercantile Exchange.
> 
> Earlier, copper reached $3.3165, the highest since Nov. 15. Futures rose 5.9 percent in 2007, rallying for a sixth straight year.



LME copper warrant cancellations rose to 12% of inventory yesterday, suggesting higher prices will be sustained into the next week.
If cancellation rates increase further, $3.50 will again be hit.
Supporting base metals generally was the suspicion that Dow Jones AIG Commodity Index fund, along with a number of replica funds, was expected to start buying various baskets of LME lots.
There seems to be a surreal disconnect of metals and energy commodities from the general market which is otherwise melting down.


----------



## BREND

Yes, agreed! The next thing that will happen is falling inventory.

If copper goes lower, I will ask my customers to sell $6600 put options, today's premium is already $60/ton. If copper goes below $7000, put options may worth $80/ton, this means US$2000/lot.


----------



## ithatheekret

Even if things tank , goods still have to be made and the amount of copper that's used for coils and alternators etc. is eye boggling .

It's a bit like zero growth , there's still growth at zero . Sustainable is a point of conclusion in my books , that's the bottom line for copper , speculation is both the hammer and the rocket fuel .

Whoever put upthe EV HEV vote is onto something though , very much in the future , but well onto something .

What system do UAV's use ? There all the go with the military and that's a big dollar .


----------



## oz_canuck

All of the alternative energy sources provided in the above post requires one thing to convert an energy source to electricity......... Generators!!!!!.... And what are Generators made out of.... Copper!!!! Yeehawww..... Sorry got excited about remembering something out of Year 8 Physics 
Anyhow I believe the initiator of this post is onto something here... IMO as the world requires more energy (not just clean energy) it will require significant amounts of copper. i do not see too much recycling as current energy sources will be required to keep their current Generators online to satisfy existing demand.
BTW - There is an interesting Copper and Base Metal play on the ASX targeting India. The stock symbol is IRL

Cheers


----------



## rederob

oz_canuck said:


> BTW - There is an interesting Copper and Base Metal play on the ASX targeting India. The stock symbol is IRL
> 
> Cheers





> *MI 10 Jan 2008*: Australian-listed India Resources, which is reactivating Hindustan Copper’s former Surda mine in the eastern state of Jharkhand, said it has shipped the first concentrates to Hindustan Copper’s nearby Moubhandar smelter.
> Mining re-started in November at Surda, which had been previously out of action since 2003.
> 9
> The smelter has a capacity of 18,000tpy of copper and India Resources said its intention is to meet 25% of the plant’s concentrates requirements by June of this year and ultimately lift that percentage to 50%.



Fell foul of the 100 character rule again!


----------



## Joe Blow

rederob said:


> Fell foul of the 100 character rule again!




There is no 100 character minimum rule outside of the three stock forums (A-H), (I-P) and (Q-Z). In all other forums there is a three character minimum, although keep in mind this does not include quoted text.


----------



## rederob

Joe Blow said:


> There is no 100 character minimum rule outside of the three stock forums (A-H), (I-P) and (Q-Z). In all other forums there is a three character minimum, although keep in mind this does not include quoted text.



Thanks Joe
But it rejected the first time I tried to post because of the said rule - perhaps a glitch


----------



## doctorj

FYI, outside of the sub-forums Joe has listed, if you're making a post that contains all quoted text, the software will not let you submit it without atleast 3 characters not bound by quote tags.


----------



## rederob

Copper inventories are declining in the US????
It is apparent that the subprime and housing crises are not materially impacting copper's bullishness.
Add to this LME cancelled copper warrants hitting 3-year highs, plus little change to the Shanghai warehouse stock levels in months, and we can see that "fundamental" factors are propping up the red metal's price.
It will take the better part of 18 months for the subprime and housing sectors to rectify themselves, which means a long wait to get back on the commodity freight train for another ride of a lifetime.
The next ride is likely to be stronger and longer, as by then the impact of emerging economies will be considerably greater.  Cap this off with benign western economies consuming to their heart's content and we have the critical ingredients for a massive bull market.
I am presently looking at OXR for a possible purchase under $3.30 but with their precious metals exposure, as well as base metals, I am only "hopeful" and not expectant.


----------



## BREND

Early January is always a good month to buy copper futures, and I always tell my customers to buy copper at year end or early Jan. 

Because there is a transition from low demand season (December) to a high demand season (1st Quarter). Hence copper price usually rises during this period.

With the huge amount of cancelled warrants building up now, the next thing that we will see is falling inventory, and this will push copper price even higher. 

But I will be caution not to be overly bullish, esp if copper price rises above $7500. I'll ask my customer to sell copper call option strike $8200 or above if copper rises to $7500, premium would be attractive then.

After copper rally, the next metal that I'll be interested will be aluminum. This metal is priced close to its production cost (US$2350). So by buying aluminum at $2400 (3 month futures) represents little risk in my view.

And towards the middle of the year, if agriculture price starts to cool down, then I'll ask my customers to buy some soybeans, corns, wheat etc.

At the same time, still waiting for gold and silver price to cool down. In the environment of falling USD and high inflation, precious metal will be good investment.

This summarised my strategy for my customers in 2008.


----------



## rederob

Rising petrol\gasoline prices are making people think much more seriously about the merits of an electric (hybrid) car.
My Mitsubishi took just over $80 to fill last week - the first time I have ever paid so much.  I average almost 1000k per week, meaning on an typical week I fill up twice.
The maths are almost there to make electric cars not just an environmentally friendly alternative, but economic good sense to boot.


----------



## rederob

Top 20 car sales in the US include 5 hybrid types.
Note in the below chart that small cars are dominating sales.
The Chev Malibu was voted "car of the year" in 2008 and has great sales to date: It also is available as a (Mickey Mouse) hybrid!!!


----------



## wayneL

rederob said:


> Rising petrol\gasoline prices are making people think much more seriously about the merits of an electric (hybrid) car.
> My Mitsubishi took just over $80 to fill last week - the first time I have ever paid so much.  I average almost 1000k per week, meaning on an typical week I fill up twice.
> The maths are almost there to make electric cars not just an environmentally friendly alternative, but economic good sense to boot.



Re electric cars:

No link, but I heard something the other week that hybrid cars aren't the green alternative they are promoted to be, in fact are worse than a pure fossil fuel small car. 


<edit to add link> http://www.guardian.co.uk/cars/story/0,,1766869,00.html


----------



## rederob

wayneL said:


> Re electric cars:
> 
> No link, but I heard something the other week that hybrid cars aren't the green alternative they are promoted to be, in fact are worse than a pure fossil fuel small car.
> 
> 
> <edit to add link> http://www.guardian.co.uk/cars/story/0,,1766869,00.html



Whatever the test outcomes, the fact remains that a hybrid version of the same vehicle with the same base power plant will achieve improved milage.
I think that "plug-ins" will soon hit the market and take over in the sales stakes, as a more-electric alternative (than hybrids per se) will save huge amounts on the weekly gas bills in years to come.
Those matters aside, this thread was themed on the role of copper in a vehicle market moving quickly to "electric".  
The time has come.....


----------



## wayneL

My Krugs are 8.5% copper.

Just thought I'd mention that. 

Missus also saved a big bag of 1c & 2c coins. I thought she was a bit kooky at the time, but she may have made us rich.


----------



## boy123

Buying season for copper in China is over, price should be trending down over the next few weeks or months.


----------



## Mofra

> Much is being made in the media over the rising price of copper. It is apparently now cost effective to melt down pennies and nickels for the copper content, although the Federal government is about to outlaw that.
> 
> But there is no copper shortage in the world, and the world's largest copper reserve is right here in the United States. It is not the Kennecott copper mine in Utah, which is the world's largest open pit mine. In fact, these copper reserves are not even in the ground. There is hundreds of millions of pounds of copper hanging on telephone poles in the U.S., and much of it has already been abandoned. One problem communities face is a lack of pole space for community fiber. The problem has been exacerbated over the years because it has been cheaper for the phone companies to simply lash new copper cables to poles than to first take down old cables. It is very common in many areas to see as many as four or five phone cables lashed to poles, which effectively prevents anyone else from using that pole space, even if they have a joint use agreement in place.
> 
> As the price of copper rises, someone will figure out it is cheaper to mine copper on poles than to dig it out of the ground, and some of those old cables will finally start to come down. In fact, we may already have crossed the threshold where copper telecom cables cost more than fiber telecom cables. And there will never be a shortage of raw materials for fiber cable--it is made from purified sand.
> 
> In any "crisis," there is always an opportunity. The copper price "crisis" will not only create new business opportunities, it may help solve some difficult community broadband problems as well.



A year or so old, however found this quite interesting. Copper wire theft is becoming quite a problem on the Melbourne train network as well.


----------



## Investor123

*Safe Strategies to trade Copper *

The commodity that I like to trade is copper, not because it is easy to make money, but because I had done a lot of research on this commodity while I was working as a commodity specialist. 

Warren Buffett said investors should invest in the business that they understand. In commodity trading I would advise traders to trade in the commodity that they understand.

Copper is an excellent conductor of electricity, as such one of its main industrial usage is for the production of cable, wire and electrical products for both the electrical and building industries. 

The construction industry also accounts for copper's second largest usage in such areas as pipes for plumbing, heating and ventilating as well as building wire and sheet metal facings.


*Strategy number 1:*

Buy the commodities that China needs and sell the commodity that China sells. Copper is mainly found in South America and Australia. Due to construction boom in China, copper has become a hot commodity, so copper is certainly a commodity that China needs. 

This has resulted in backwardation for copper. If you do not know what does backwardation means, click here. So when copper is in contango, traders should grab this opportunity by selling far month contract and buying near month contract.

In the spread chart, value above $1 means copper is in backwardation, value below $1 means copper is in contango. Copper was only in contango 3 times since 2003. During that period of times, its best to trade spreads, means betting that copper will move back to backwardation. 

*Strategy number 2:*

To understand commodity, we have to understand the seasonal trend of the commodity. Buying season for copper comes in when after Chinese New Year. That is when China factories start to place buying order for their production.

If you looks that copper chart, copper price always rises after February which is the Chinese New Year period. So traders should buy copper futures 1 - 2 weeks before Chinese New Year.

Both strategies mentioned above are relatively safe and highly profitable.


----------



## Investor123

Chart for Strategy 1:


----------



## Investor123

Chart for strategy 2:


----------



## ducati916

rederob said:


> Copper inventories are declining in the US????
> It is apparent that the subprime and housing crises are not materially impacting copper's bullishness.
> Add to this LME cancelled copper warrants hitting 3-year highs, plus little change to the Shanghai warehouse stock levels in months, and we can see that "fundamental" factors are propping up the red metal's price.
> It will take the better part of 18 months for the subprime and housing sectors to rectify themselves, which means a long wait to get back on the commodity freight train for another ride of a lifetime.
> The next ride is likely to be stronger and longer, as by then the impact of emerging economies will be considerably greater.  Cap this off with benign western economies consuming to their heart's content and we have the critical ingredients for a massive bull market.
> I am presently looking at OXR for a possible purchase under $3.30 but with their precious metals exposure, as well as base metals, I am only "hopeful" and not expectant.




Well electric cars are seemingly on the increase. What about your hypothesis with regards to copper? Prices are falling and inventories are rising.




jog on
duc


----------



## rederob

ducati916 said:


> Well electric cars are seemingly on the increase. What about your hypothesis with regards to copper? Prices are falling and inventories are rising.
> jog on
> duc



I think my copper price estimates will be blown out of the water in the next bull run.
Careful reading of the post you quoted states that I was looking at an 18 month time frame for the subprime meltdown to wear through.  Given you were not posting here I have no idea of your thoughts on this at that time.  I think my time frame is reasonable, although "globalisation" seems to add a new spin on old themes.
You might notice that LME inventories are where they were over 4 years ago, and remain well below historical highs.  I am confident copper inventories will rise substantially in the near term as present market conditions are dire, so prices will drop further still.
There remains a questionmark over copper stock builds in terms of percentage increases week on week.  Overall copper inventories have been rising at a subdued pace.  If you were using copper as a "barometer" for industrial activity the forecast would be for fair weather, not foul.


----------



## Reealjrd

I dont trade in copper but i can say that with the increase in oil and gold prices copper is also going to move towards to its high.


----------



## Reealjrd

rederob said:


> Top 20 car sales in the US include 5 hybrid types.
> Note in the below chart that small cars are dominating sales.
> The Chev Malibu was voted "car of the year" in 2008 and has great sales to date: It also is available as a (Mickey Mouse) hybrid!!!




Hello rederob,

  This chart which you have give is good. As copper cannot come down because the automobile industry requires a lot. Till the automobile industry is alive copper cannot have any problem.


----------



## ducati916

rederob said:


> I think my copper price estimates will be blown out of the water in the next bull run.
> Careful reading of the post you quoted states that I was looking at an 18 month time frame for the subprime meltdown to wear through.  Given you were not posting here I have no idea of your thoughts on this at that time.  I think my time frame is reasonable, although "globalisation" seems to add a new spin on old themes.
> You might notice that LME inventories are where they were over 4 years ago, and remain well below historical highs.  I am confident copper inventories will rise substantially in the near term as present market conditions are dire, so prices will drop further still.
> There remains a questionmark over copper stock builds in terms of percentage increases week on week.  Overall copper inventories have been rising at a subdued pace.  If you were using copper as a "barometer" for industrial activity the forecast would be for fair weather, not foul.




rederob,

With regard to your 18mths timeframe, I actually agree that that is probably a reasonable estimation.



> The next ride is likely to be stronger and longer, as by then the impact of emerging economies will be considerably greater. Cap this off with benign western economies consuming to their heart's content and we have the critical ingredients for a massive bull market.




I'm not sure that Western economies will once again consume quite so freely in the immediate future. Bubbles, once popped, tend to avoid that asset class for some time. Thus the housing bubbles that inflated worldwide, will not re-inflate within the timeframe that you are postulating.

Building of infastructure, particularly in the emerging economies, while necessary will be financed how?

Trade surpluses were built through massive US consumption. Will that return? Thus will paying "cash" still be an option?

If not, then debt.
Will emerging economies want to incur debt on this scale?
Who will lend to them? Huge amounts of capital are evaporating currently.

Thus, I do not agree with your assessment of a continued and stronger commodities bull market.

jog on
duc


----------



## rederob

ducati916 said:


> Thus, I do not agree with your assessment of a continued and stronger commodities bull market.



I began this thread over 11 years ago and so much has changed.
We now know a lot more about the actual quantities of copper used in all forms of electric vehicles.  My original figures were very conservative for HEVs and as BEVs were not on the scene back then, we now have a new metric. HEVs will disappear and BEVs will become the new normal, consuming about 4 times the amount of copper as an ICE (internal combustion engine) alternative.
What I did do in my first post in 2007 was to look at at how much copper would be needed to convert the entire car fleet to EVs by 2027, just to show the massive volumes of copper involved. (There was no way that our manufacturing base could achieve that, even if every vehicle manufactured since 2007 was an EV.)
WRT to the ducati quote, I never assumed that after the subprime meltdown there would be an immediate shift to a bull market of any sort.  Commodity bulls are very few and far between - just look at oil and gold as examples.  However, as the BEV market accelerates, there is every chance that a number of metals essential to EVs will stretch the supply chain such that in a flat world economy there will be areas of significant outperformance.
Over the next few weeks I will look around to see if the major copper producers have any data or specific reports on what they regard as probable.


----------



## Ann

rederob said:


> I began this thread over 11 years ago and so much has changed.
> We now know a lot more about the actual quantities of copper used in all forms of electric vehicles.  My original figures were very conservative for HEVs and as BEVs were not on the scene back then, we now have a new metric. HEVs will disappear and BEVs will become the new normal, consuming about 4 times the amount of copper as an ICE (internal combustion engine) alternative.
> What I did do in my first post in 2007 was to look at at how much copper would be needed to convert the entire car fleet to EVs by 2027, just to show the massive volumes of copper involved. (There was no way that our manufacturing base could achieve that, even if every vehicle manufactured since 2007 was an EV.)
> WRT to the ducati quote, I never assumed that after the subprime meltdown there would be an immediate shift to a bull market of any sort.  Commodity bulls are very few and far between - just look at oil and gold as examples.  However, as the BEV market accelerates, there is every chance that a number of metals essential to EVs will stretch the supply chain such that in a flat world economy there will be areas of significant outperformance.
> Over the next few weeks I will look around to see if the major copper producers have any data or specific reports on what they regard as probable.



Rob, would you mind if I copy and pasted this post over to the Copper Charts thread? I always apprciate what you have to say and I would like to hang onto it where I can find it?


----------



## rederob

Ann said:


> Rob, would you mind if I copy and pasted this post over to the Copper Charts thread? I always apprciate what you have to say and I would like to hang onto it where I can find it?



There is no chart Ann, but feel free.


----------



## Ann

rederob said:


> There is no chart Ann, but feel free.



Thanks Rob, I think I will get Joe to change the heading to just Copper. Once it was up I realized it precluded FA and that is always interesting and a valuable asset in any discussion.


----------



## rederob

"Fitch Solutions Macro Research ... expects the global copper market will see a persistent undersupply over the coming years, as global consumption, driven by China's power and infrastructure sectors, *and increasingly by rising electric vehicle production*, continues to outpace supply growth."


----------



## rederob

Yesterday copper went into backwardation again as LME inventories have continued to decline:



Available LME stock is a tad over 50k tonnes:



Next target prices for copper?



How far does copper run in a bull market?


----------



## rederob

Sorry that the legend to the last chart above did not show:


As you can see, copper and nickel have similar trends over the past 20 years, except for when nickel went ballistic early in 2007 due to a massive deficit.
Interestingly, when BEV's make their batteries to the 8.1.1ratio then  a 60kwh NMC811 battery uses 5kg of cobalt, 5kg of manganese, 6kg of lithium and 39kg of *nickel*.  This is almost the same weight used to calculate the increased demand I proposed for just Hybrid Electric Vehicles when this thread began 13 years ago.
By way of comparison *copper *content of "electric" vehicles is nowadays as follows:



As manufacturers are currently switching to greater numbers of pure BEVs, more than twice the copper content now needs to be used as the basis for this thread.
Elsewhere lithium can be discussed, as that market has recently also bounced back as the BEV evolution continues:


----------



## rederob

Copper producers are in for a bonanza if they are supplying into the price upside right now:


LME forwards remain in backwardation, while LME inventories are relatively unchanged over the past week.
I don't know how much copper is available for recycling, but anything out there will be prized.
And leading the charge is:


----------



## frugal.rock

Posted elsewhere, if there's anyone else out there like me, they've been collecting scrap for over 15 years waiting for times such as these.... I'm holding out for over $4...



frugal.rock said:


> Well Copperheads everywhere must be cheering today, POC breaking to new highs.
> Nearly stepped on a copperhead once, good thing it was earlish morning and it was sluggish... I jumped like a gazelle mid stride!
> 
> I believe I should start digging out my scrap copper collection and get stripping again.... insulation that is!
> Have a air conditioner I picked up about a year ago, someone chucking it out.
> It's an old school in wall jobbie, and has 2 copper cored exchangers... I'm guessing that maybe their worth around $100
> 
> Also have a bunch of old heavy duty HV mains cable, the stuff that has petroleum jelly and paper wrap as insulation and the outside sheath is lead...yeehaa.
> 
> Last trip to the scrappies was around late 2006, early 2007 and bright shiny wire was around $9.50 per kilo.
> I remember driving past Lucas Heights nuclear reactor area and saw someone had dumped an old car radiator, mostly copper it was.
> Got $40 in scrap for the U turn to jump out and pick that up.... I reckon a radiator like that is probably worth $300 as a spare part now though, after a recore that is.
> Anyway, enough of me reliving the dream...
> 60 year chart
> View attachment 119857
> 
> 
> 20year chart
> View attachment 119858


----------



## Dona Ferentes

frugal.rock said:


> been collecting scrap for over 15 years waiting for times such as these.... I'm holding out for over $4...



When does the thieving start, when functional equipment is rendered useless by opportunism(= vandalism)?


----------



## rederob

Looking back at copper prices over the past 20 years or so there are some interesting observations to be made.


The initial bull market led into the GFC, and subsequently saw prices crash to levels 4 years previous.  
Interestingly, the 2005 bull market went parabolic, while the 2009 did not.  
So far the 2021 bull market remains linear, and incredibly narrow.   That is unlikely to continue as there are always corrections.  However, both of the previous bull markets ran to further highs before failing.
Takeaways:

 Each of the previous bull markets ran for at least 2 years, whereas the current one is not yet a year old
Each of the previous started from higher lows, and ended higher again
If a similar trend repeated, then this bull run will exceed $5.25/lb
As this thread was premised on an EV evolution increasing copper demand, and that demand is barely in its infancy  right now, I envisage this bull market to be significantly stronger and longer than any previous.  Moreover, even if there is a shift to hydrogen over batteries, the *electric *platform remains.


----------



## rederob

Since last posting a chart, copper prices breached $4/lb and have held up in that range for most of the past month.
Despite strong copper prices, LME warehouses are not seeing the usual large inflows that have been a feature in Kitco's charts:



Here's a conservative take on where things stand:



			https://www.tradingview.com/x/B9bnMSMB/


----------



## Dona Ferentes

frugal.rock said:


> if there's anyone else out there like me, they've been collecting scrap for over 15 years waiting for times such as these.



Scenes from Council clean-up day.... All electric fans and other machinery with copper,, put out for collection; busted open and coils taken, plastic and housing scattered and left lying around


----------



## frugal.rock

Dona Ferentes said:


> Scenes from Council clean-up day.... All electric fans and other machinery with copper,, put out for collection; busted open and coils taken, plastic and housing scattered and left lying around



Grubs.

Myself and society operate modus Vivendi.

If I see grubs like that I want to yell at them. Filthy animals.

That's why I like to hear of the occasional "death by misadventure"....


----------



## rederob

*As you can see, spot prices have remained in the $4 range over the past month.*



*That's despite a solid inventory build:*


*The reason is simple. Cancelled warrants comprise a third of LME inventory and backwardation remains firmly in place:
*



*And who else is exposed to this lingering upside?*


----------



## Garpal Gumnut

Thanks @rederob  . You cannot beat copper to hold its value in the long term, nor iron ore. Which copper stocks turn your fancy ?

gg


----------



## rederob

Garpal Gumnut said:


> Thanks @rederob  . You cannot beat copper to hold its value in the long term, nor iron ore. Which copper stocks turn your fancy ?
> 
> gg



I like OZL most as their gold byproduct credits mean every ounce of copper is profitable.
Of the explorers, I several times have bought into SVY and have an average entry price of about 65cents.  But they seem like the _gunners _- gunna be a biggie!  - yet haven't delivered to date.


----------



## rederob

*Spot copper prices overnight hit a recent-record high of $3.32/lb before dipping 4 cents, and closed at its highest since June 2011:*





B*ackwardation has continued to increase (from around $150/tonne in January to well over $200 now), suggesting demand is known to be strong:*




*Cancelled warrants remain at above 30% of LME total warehouse stock.*


----------



## rederob

LME cancelled warrants now outnumber live warrants, so anyone after spot copper is going to continue paying a premium:



Good chance we will now see a closing price above $4.30 for the first time since the last bull run.


----------



## rederob

Goldman Sachs calls copper “the new oil”​Snippets:
*Goldman forecasts a copper price of US$15,000 per tonne by 2025, up from the US$9,000 per tonne today. It estimates prices for the metal will average US$9,675 per tonne this year; US$11,875 per tonne in 2022; US$12,000 per tonne in 2023; and US$14,000 per tonne in 2024.*​And:
*Goldman estimates “EV-related demand to amount to 2.4 million tonnes of copper by 2030 (vs. 210kt in 2020) with an additional 153kt of copper demand coming from charging stations (vs 14kt in 2020). We expect this demand to grow at a rate of 31% a year for the remainder of the decade.”*​​When I began this thread back in 2007, energy from solar and wind was exceptionally expensive and I never included their potential in my very basic calculations.  However, by 2030 these sources are expected to generate greater copper demand than EVs.
Recycling demand will remain strong.


----------



## frugal.rock

A case for one copper thread... concurrent threads is not good for the heads.



rederob said:


> I had posted some charts in another copper thread, but here's today's picture:
> View attachment 123393


----------



## rederob

frugal.rock said:


> A case for one copper thread... concurrent threads is not good for the heads.



The original thread at the other place was "Copper *Charts*" from memory and I believe Joe later chopped off "*charts*" from the title.
This thread was based on *fundamental *drivers of copper demand such as EVs and how price is affected.
I was going to add the ISCG info on the weekend, but it's latest data was only up to January and i think we have moved well past that time.
Most of charts and tables in this thread relate to supply and demand, especially via LME data.  This year I picked up the first instance of backwardation which is usually the precursor to a bull market rally.  Backwardation does not show up in typical price/volume style charts. 
I also have not focussed this thread on explorers/primary producers, which the other thread picks up.
However, if Joe wants to integrate this into the other thread, that's fine


----------



## rederob

Usually when metal prices start to head into the stratosphere there is a massive inflow into warehouses - the supply response.
But LME warehouses are still seeing strong stock cancellations, and the copper price remains in backwardation:




Somewhat less volatile than LME are Comex's warehouses, where drawdowns have been recently consistent:


----------



## rederob

*Backwardation has increased to $244:*


*Net additions of 8888 (incredibly **lucky**!) tonnes at SFE linked warehouses:*




*Given the price of copper and lack of any meaningful warehouse inflows, the case for copper to keep running higher remains sound... as the latest spot prices show:*


----------



## rederob

Is this a crazy headline?
"Copper to surge at least seven-fold before this bull market is over - Goehring & Rozencwajg"​They are not talking about this year or the next, but are looking at a range of issues that will affect the price over the coming decade. Renewable energy and electrification generally will be key drivers, but they clearly point to an impending failure from a supply response.
In terms of global reserves of copper, the pie slices like this:





An interesting statistic from the above is that BHP's Olympic Dam has the 4th largest copper reserve, but is only the 20th largest producer.  BHP has always wanted to do a lot more at Olympic Dam and the surging copper price might be their catalyst.


----------



## rederob

*Yesterday LME's 3 month bid went into contango for the first time in months, and the 12 month bid narrowed appreciably, although remains firmly in backwardation.*


*As a result the upward price advance confirmed a turnaround:*


*Although COMEX warehouse levels show a decline, there have only been outflows in the past week, so this chart only tells half the story:*


----------



## rederob

I meant to show LME Warehouse levels above, as copper on warrant has been unchanged at 74250 tonnes for over a week now, with small daily outflows:


Reports suggest China has not bought around a million tonnes of copper concentrate from Australia due to the trade dispute, so that's a lot of potential supply in the wings.  Offsetting that are machinations in Chile (world's biggest supplier) with BHP and also the government, not to mention covid disruptions, all making the supply response a bit of crap shoot.


----------



## rederob

Copper off the boil!
Backwardation withering away:
	

		
			
		

		
	



Given that high prices have not seen copper flooding into warehouses, it's likely copper prices will hold above $10k for some time.


----------



## rederob

A tale of two continents.
At LME we have had small stock builds, and backwardation about to end:


But in China we have had firm daily withdrawals over the past week:


Given the petty numbers involved, tight supply is the norm and consumers in China who have been deferring purchases have literally been taking stock.


----------



## rederob

Although copper has come off historic highs over recent weeks, Chinese inventories have been declining steadily over the same period, dropping almost 30000 tonnes in the past 3 weeks.



Meanwhile at LME warehouses slight stock builds have been occurring, pushing the copper price back to contango:


What is undeniable is that the copper market is incredibly tight globally, as even Comex warehouses have been in continuous decline for over a month.  So we know that copper's high price has yet to lead to any meaningful supply response. 
On the other hand, the US stimulus package has barely started to make a difference, so in coming months copper demand there is likely to sustain the metal's high price.


----------



## rederob

*While LME's copper warehouses have had steady inflows over the past few weeks, the opposite has occurred for Comex:*

* and Shanghai:*


If I were to hazard a guess, I would say that Chinese consumers who have an urgent need for copper in their factories are now taking advantage of slightly cheaper prices and eating into stock.  
The interesting takeaway is that over the past few months the total amount of copper in the 3 warehouse chains is relatively unchanged.  So while copper prices have fallen considerably over the fortnight, the global picture really has not changed.


----------



## Garpal Gumnut

Thanks @rederob   I’m still v bullish Cu.

gg


----------



## Sean K

Anyone else following Chile politics and what happens when the new taxes on copper and lithium get passed and introduced? 

I've got a feeling several miners will become unviable and will have to shut down. Can't say which ones just seen that statement made by several players including BHP's head of Americas. 

Shutting down mines is going to likely put even more upward pressure on prices with no new large scale mines on the horizon. 

Also makes my little play into HCH look foolish at this time.


----------



## Dona Ferentes

Comments from Glencore’s about to retire CEO, Ivan Glasenberg make it easy to understand the metals’ current market strength. He told a forum in the Middle East on Tuesday that a supply gap was growing in the metals necessary for the world to replace fossil fuels with renewable energy, but he stopped short of predicting a so-called super cycle.

Glasenberg said at the Qatar Economic Forum that copper supplies needed to increase by one million tonnes a year until 2050 to meet an expected demand of 60 million tonnes.


> “_Today, the world consumes 30 million tonnes of copper per year and by the year 2050, following this trajectory, we’ve got to produce 60 million tonnes of copper per year,_” he said.





> “_If you look at the historical past 10 years, we’ve only added 500,000 tonnes per year … Do we have the projects? I don’t think so. I think it will be extremely difficult_,” according to Reuters.


----------



## Beaches

From an interview earlier this month

_*James Gerrish:*_​_So, commodities are cyclical, in so far as the price incentivizes new production to come on-stream. So, it begs the question, how much new production can global copper production in any meaningful scale can come on-stream over the next coming years? Is the market constrained or is high price incentivize new mine development?_​​​_*Peter O'Connor (Shaw and Partners):*_​_I love this because the easiest narratives a player in the market uses are the ones they have no idea about. They just use them because everybody hears the same thing and they just go, "Oh, yeah, great. Copper's in short supply. Why? Because grades declining and strip ratio's going up." Nobody really has a clue what they're talking about. Same as when they talk about a supercycle, I don't think anybody really understands what they're talking about._​​_Now, I'm being facetious. But the copper market will be tight at times and not at others. Over the next three years, it's expected the copper market will be in surplus. Aside from this demand pulse, copper should be in '22, '23, '24, likely in a slight supply surplus, as new mines are coming on in Latin America as well as in Africa and in Australia, and BHP alone is bringing on 300,000 tons of copper, and they're very happy to tell the whole world that, over the next two to three years._​​_So, the copper market, in terms of mine supply, is about 18 million tons. Grows at about 3% per annum. That's about 500,000 tons of new copper per year. BHP can do... their next growth phase, that's half a year's supply. That's one mine, one company. So, copper suppliers traditionally, other than short squeezes or periods of one or two year squeezes has typically caught up. Why? Because everybody's drilling the world for copper because copper's one of the easiest commodities to find, along with gold. Newcrest, Rio, BHP, Glencore, they're all looking for copper. So, copper's likely to have pinches like now. There may be another EV-related one, which everybody's trying to pin it down to now in 2025. Right now, supply and prices incentivize producers to look everywhere in the world. And how many new companies want to be in copper at the moment? Not least we've got an IPO that just came out literally yesterday in Australia. So, I think you'll find supply has traditionally kept pace, albeit, at times, it does fall behind, like right now that demand pulse is greater than supply availability._​

Full transcript here:









						Direct from the Desk: A deep dive into Oz Minerals
					

In the fourth episode of 'Direct from the Desk' I'm joined by Senior Analyst Peter O'Connor to take a deep dive into Australia's no 1 copper stock, Oz Minerals (ASX:OZL).  Oz is Australia's premier copper focused miner with a global footprint. It generates the bulk of its earnings from copper...




					www.livewiremarkets.com
				



.


----------



## bk1

Beaches said:


> So, I think you'll find supply has traditionally kept pace,



But we are not in a period that could be called "traditional".

Producers No1 and 2, Peru and Chile want to raise the royalty tax on copper miners. DRC, the biggest producer in Africa has banned the export of copper and cobalt concentrates.
The goodthinkers are demanding an instant decarbonisation of the planet. Belt and Road Initiative. And now, Build Back Better World.
Three scenarios that entail massive amounts of Copper.
Either BRI subsides/implodes under the weight of debt, or, B3W turns out to be a mirage of well intentioned thought bubbles, or, our proud aussie cows stop chewing the cud and farting.


----------



## SyBoo

China to auction copper, aluminium and zinc from state metal reserves in bid to curb soaring commodity prices | South China Morning Post (scmp.com)

some snippets;

The National Food and Strategic Reserves Administration said in three separate notices it would auction 20,000 tonnes of copper, 30,000 tonnes of zinc and 50,000 tonnes of aluminium on July 5 and July 6.

For copper, the auctioned volume is 2.3 per cent of May’s refined output...

The release of state metal reserves in China is one of a number of attempts by Beijing to cool a stellar rally in commodity price that has squeezed manufacturers’ margins.

“We expect more sales from reserves combined with slower underlying demand and seasonal weakness to put a lid on prices in the very near term, but we then expect a rally to new highs over the next 3+ months,” Jefferies analyst Christopher LaFemina said in a note.

_BTD_


----------



## rederob

Today saw LME finally add a decent amount of copper to their warehouses, and futures prices have reacted accordingly:


----------



## rederob

When I posted back in 2007 we had some hybrid EVs to use as a base for calculating the impact that EVs would have on the copper market.
Wood Mackenzie use this figure for their assessment:


The substitution effect is about 50 extra kilos/EV or 20 EVs to the tonne.
Translating this to EV uptake we can say that for every 20K EV's on the road we need an extra 1K of copper.
 demand.
Various studies put EV annual compounding growth rates into the 2020's above 30%.  Using the chart data below as a base, let's say in 2021 we get one million additional EVs registered.


So that's an extra 50K tonnes more than 2020 just for cars.  Then there's buses, heavy vehicles and associated charging infrastructure.
Here's the ISCG's copper forecasts for this year and next:


I don't know what the ISCG has used for it's EV data inputs, but if they prove conservative then this market segment alone can move 2021 and 2022 back into deficit.


----------



## dyna

Well organised copper thieving gangs have struck 7 times in Coivrel, an the isolated town in the Oise district ,north of Paris, pulling out 600 m lengths of  phone and internet lines hooked up to a car's tow bar. According to last week's France 20 Heures tv report ,local gendarmes, with the help of new electronic surveillance of the lines, have manage to reduce the 55 thefts since 2019  by about a 1/3 rd.


----------



## rederob

Another big inflow into LME Warehouses overnight:


Comex and Shanghai warehouses continue to show small daily stock declines, which might explain why copper prices have remained elevated in the past few weeks.
The fact we have markedly different trends on different continents suggests copper prices won't fall into a chasm any time soon.


----------



## rederob

In the past month LME inventories have increased about as much as SFE Warehouses have declined.



LME prices are now firmly in contango:


Comex warehouses remain on the slide, but withdrawals are slight.
So the market remains tight.
It is not going to take much to literally change the balance.  However, with known future year supply deficits any downside surprise is likely to be quickly bought into on the futures market.


----------



## rederob

Copper returned to backwardation:


LME usually gets a sniff of the trend before it becomes obvious, and as you can see from warehouse levels, there's a lot in stock so you could ask why?
Maybe because that's not the case in China, where demand continues to deplete stock:


What makes the Chinese decline more telling is that a month ago China's State Reserve Bureau sold 20k tonnes into the market, and it made no difference!


----------



## rederob

*Lots of chopping and changing of warehouse stock levels in recent months, but overall little total change across Comex, SFE and LME:*


*SFE Warehouses:*


SFE drawdowns have been 4-5% daily for a few weeks so that can't continue much longer.  I should add the downtrend continued despite a 10K tonne addition to their SRB.
This was supposed to be a year with hundreds of thousands of tonnes being added to existing levels.  Not happening!


----------



## rederob

China's warehouses are almost empty:


Industries will be hoping their SRB has some copper on hand, otherwise manufacturing and production will be in for some shocks.
Meanwhile the headline figure for LME looks ok, but live warrants are actually down over 50K tonnes in the past month:


Comex warehouses have seen small inflows but are holding half the volume of LME's so are small players in the looming shortage.


----------



## rederob

LME cancelled warrants are now greater than live warrants:



Despite tight copper supply in China in particular, and now across LME's warehouses, prices have declined over the past month.  
This more likely reflects weakness across all metals complexes on a cyclical rotation rather than on any fundamental grounds as base metals have been leaving warehouses on a consistent basis over the past 6 months.
Unless there are firm metals inflows prior to Xmas then there is likely to be a price rebound greater than those levels reached recently.


----------



## rederob

LME copper prices seem to be rising as fast as warehouses are emptying:




Meanwhile *Shanghai Futures Exchange Warehouse Stocks *at 10084 tonnes are the lowest I have monitored.
Add a paltry 56K tonnes from NYMEX copper warehouses and you can see how tight supply is.

Unless there is a supply response soon, copper at $5/lb is on the cards.


----------



## rederob

With a decline of over 30K tonne in a day LME's copper warehouses  will provide the metal a lot more price upside:




Unless there's a ship out there without a committed load, the copper price is about to go gangbusters.


----------



## rederob

Although LME warehouse have been adding stock since I last posted here, SHFE warehouses have been steadily emptying:


Depending on where you read, copper is in undersupply or oversupply.
But I began this thread over 14 years ago on the premise that EVs would change copper's market dynamic.
The 3 things I underestimated at the time were:

total copper content in an EV
additional demand due to massive wind turbines, and
global shift towards greater electrification.
This year global EV sales will be a shade under 6 million vehicles.  However, in 2022 I expect this to be nearer 10 million as the *big  *legacy ICE manufacturers begin their pivot to EVs in America in particular, and to a lesser extent Europe.   And by 2025 I cannot see any manufacturer knocking out more ICE than EV unless they can't get hold of batteries (very likely!).  So whatever consumption might be reduced as a result of China's Evergrande debacle will be more than offset by EV production. 

on


----------



## divs4ever

maybe we are looking at the wrong  driving forces  telecommunications is using more fibre less , copper  most electronic devices   have reduced copper inside  ( including most computers ) ,  there is  a trend away from copper water pipes  ( except for hot water ) in homes/apartments , 
 i would love copper to go to the moon  , but are we jumping in front of the train ( not on it )

 EVs might be important  but what if less vehicles are owned ( ignoring those in collections and museums ) in total  in the future


----------



## rederob

divs4ever said:


> maybe we are looking at the wrong  driving forces  telecommunications is using more fibre less , copper  most electronic devices   have reduced copper inside  ( including most computers ) ,



Consumer durables account for only 5% of copper demand, and while there might be less per product, the number of products keeps increasing.



divs4ever said:


> there is  a trend away from copper water pipes  ( except for hot water ) in homes/apartments ,



Depends what country you live in.  Also, over half the world is in the undeveloped/developing category so demand will continue to increase.


divs4ever said:


> EVs might be important  but what if less vehicles are owned ( ignoring those in collections and museums ) in total  in the future



Over 99% of all vehicles are *not *electric.  The tsunami of EV production is presently just a ripple as a round a billion vehicles need to transition, and that's assuming zero net additions.


----------



## divs4ever

but the developed world  is mostly gripped by aging, shrinking populations ( even with modest migration )

 there is probably just as much growth in mobility scooters and motorized wheel-chairs 

 and up to 50% of the world cannot afford most EV offerings ( vehicle  or power infrastructure ) although China is putting out some low cost options  , the dominant vehicle might look  more like a heavy-weight golf buggy than a Tesla 

 something like an EV Mini Minor might be a solid seller , globally


----------



## rederob

divs4ever said:


> but the developed world  is mostly gripped by aging, shrinking populations ( even with modest migration )



Not really relevant to copper's increasing use, especially with regard to the developing world's infrastructure needs.


divs4ever said:


> and up to 50% of the world cannot afford most EV offerings ( vehicle  or power infrastructure ) although China is putting out some low cost options, the dominant vehicle might look  more like a heavy-weight golf buggy than a Tesla
> something like an EV Mini Minor might be a solid seller , globally



You need to get up to date on the global EV market as your comments might have been relevant 5 years ago, but not today.  I could list a hundred EV models you have never heard of, but this link is the best overview of what's happening where most NEVs are being produced.


----------



## frugal.rock

"Chart Of The Day: Inflation Hedge Copper Prepares To Shatter Its All-Time Record"









						Chart Of The Day: Inflation Hedge Copper Prepares To Shatter Its All-Time Record | Investing.com AU
					

Commodities Analysis by Investing.com (Pinchas Cohen/Investing.com) covering: Copper Futures, United States 10-Year, 10-2 Year Treasury Yield Spread. Read Investing.com (Pinchas Cohen/Investing.com)'s latest article on Investing.com Australia.




					au.investing.com


----------



## rederob

rederob said:


> When I posted back in 2007 we had some hybrid EVs to use as a base for calculating the impact that EVs would have on the copper market.
> ....
> 
> The substitution effect is about 50 extra kilos/EV or 20 EVs to the tonne.



What we now know is that 2021 EV production was significantly higher than all analyst forecasts,  Despite this, and all legacy automakers making strides to increase the EV output from very low base numbers, we continue to see rather conservative forecasts for future EV production/sales:
*Global sales **of electric vehicles doubled in 2021 Global light electric vehicle (EV) sales surged in 2021, rising steadily in each quarter, with an estimated 2 million EVs sold in the December quarter 2021. Total EV sales for the year increased from 3.2 million in 2020 to an estimated 6.5 million vehicles in 2021 (Figure 15.1). Global EV sales are expected rise by a further 3 million units in 2022, pushing up total sales to over 9 million EVs. Global market share for EVs has tripled over the past two years, with EV sales now representing close to 9% of the global car market. Strong underlying demand and EV manufacturers’ declarations of further increases in production imply that EV sales could reach around 40% of vehicle sales annually by 2030. s:*​*

*​Both BYD and Tesla will  more than double their EV production in the next 12 months,  And while they are big players in the market, let's look at the UK's 2021 sales data as a basis for examining global trends (especially seeing that it's a RHD drive market and therefore represents a conservative picture of what's occurring):​​No BYD sales above, and Tesla accounted for less than 20% of total EV registrations.​I am forecasting 2022 production at above 10M units and 2023 at nearer 18M units.  I think Figure 15.1 is an underestimate of no less than 100% by 2030.​Why so?​For a start, BYD and Tesla combined will produce between 8 and 9 million units collectively in 2025.  If I used the UK data and extrapolated it then 2025 we are already at 40M.  Note the UK data also has zero sales from Ford or GM or Stellantis.  Nor does it include any vehicles produced by Tata or Mahindra. More telling still is that Toyota, the no 1, car manufacturer, is not yet in the picture.​


----------



## frugal.rock

China's spot copper premium to stay elevated as demand improves
					

The copper spot premium in top consumer China could stay elevated in the next few months, analysts and traders said on Friday, as demand for the metal has improved on the back of government stimulus.




					www.reuters.com


----------



## frugal.rock

Interesting increase in volume coming out of October. Daily


----------



## frugal.rock

This was expected last week...
Pop. $4.00 party. 🎉🥳🍾


----------



## JohnDe

Why does copper fascinate investors so much?















						Copper - 2023 Data - 1988-2022 Historical - 2024 Forecast - Price - Quote - Chart
					

Copper futures approached the $4 per pound mark in early January, the highest since June, supported by expectations of stronger demand and looming supply concerns. Chinese authorities reopened mainland borders with Hong Kong and relaxed quarantine for incoming travelers, further moving away from...




					tradingeconomics.com


----------

