A case for copper?

[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:

1. total copper content in an EV
2. additional demand due to massive wind turbines, and
3. 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]

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.

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.

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]

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.

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

au.investing.com

 

[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.
....

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. ???