A case for copper?

[JohnDe]

Why does copper fascinate investors so much?

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

Copper futures extended hovered near $4.1 per pound in late March, the highest in three weeks, as expectations of strong demand and concerns of lower supply offset the sharp rebound for the greenback. Fresh data showed that copper demand in China rose by 13 percent year-on-year in February...

tradingeconomics.com

 

[rederob]

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.​

Not by much, but it did happen:

(Note that EV Sales had 10.5 million.)
What's ahead?
Bloomberg NEF the IEA and EV Sales are all reckoning on a tad over 14 million EV this year:

I reckon 15 million easy and more likely 16 million EVs will be produced. BYD and Tesla together should add over 2 million more EVs based on run rate trends, so I can't see the other 100+ manufacturers only adding an extra 2 million over 2022's numbers. And in 2024 all the legacy automakers will be trying to catch up with Tesla, so unless there's a change in trend the above chart will see 2026's forecast out by 8-10 million.

Copper availability has been tight for over 2 years, but I believe it will get desperately so before year's end. LME's warehouses show over 80k tonnes in stock, but in reality 55k tonnes is cancelled, leaving a mere 25k tonnes available for purchase. SHFE's warehouses have less than 20k tonnes in stock and Comex has another 30k tonnes, but I don't know how much of their stock is cancelled. Either way, warehouse levels are only enough to meet one day's present consumption.

 

[rederob]

Below is the 5-year LME stock numbers for copper:

If you were a chartist you would note the trend of both lower highs and lows, suggesting more lows on the cards. However, typically with commodities low inventories lead to higher prices and a demand response kicks in to reverse the trend.
But as you can see below, higher prices kicked in over 2 years ago but failed to rally as stock levels dwindled to record historical lows:

In China, SHFE's warehouses have rapidly depleted their copper stock in rent months, falling from 145k tonnes to this level yesterday:

In America Comex's warehouse levels rose by 3k tonnes over the past 2 months, so it isn't an important player in the global resupply chain. Nevertheless, it is presently on par with LME warehouse stock availability so might delay a sharp copper price rise for a few days if global stock levels near total depletion.