Copper

[greggles]

The rebound in the copper price could be upon us very soon if reports of looming supply shortfalls are accurate.

A coming copper shortage could derail the energy transition, report finds

Demand for copper is set to soar as renewable energy such as wind and solar become more popular. But there's one problem: We don't have enough.

www.cnbc.com

 

[Dona Ferentes]

Like many economically sensitive assets, copper is sending an extraordinarily bearish signal right now. - WSJ

Dr. Copper’s Patients Are All Ill

Like many economically sensitive assets, copper is sending an extraordinarily bearish signal right now.

www.wsj.com

Copper, gold, silver and all other metals are being hammered (Smithy pun) again

though, short term, its forging ahead

Copper prices are about 3% higher today on a short-covering but it's been a rough ride from $4.60 in early June to $3.20 today

 

[Dona Ferentes]

Copper, gold, silver and all other metals are being hammered (Smithy pun) again today.

Sure, it's beaten up.

though, short term, its forging ahead

Will it last?

 

[greggles]

Sure, it's beaten up.

Will it last?

If Europe and the US head towards recession, copper will resume its downtrend. If we get signs of economic recovery, it will head north again.

My gut feeling is downside is limited due to supply side issues coupled with increasing demand. Global macroeconomic turmoil is the primary reason for the recent price decline. Long term the strong fundamentals remain intact. It will be a volatile second half of 2022, but my view is copper will come good in 2023 and beyond.

 

[divs4ever]

Copper, gold, silver and all other metals are being hammered (Smithy pun) again today.
DXY surging higher. There's no bottom in sight yet.

am carefully looking for opportunities ( to add more ) if no new iron , copper and other base-metals mined ( for whatever reason .. like exorbitant costs or taxes ) your civilization goes down the abyss ( not cost effective to recycle all your society's needs )

 

[divs4ever]

no ( new ) copper equals no energy revolution nor technological revolution

but back to the Stone Age is always an option ( even if an unpleasant one )

 

[moXJO]

Government stimulus is the big 'bull runner'.
Still a while off, if at all imo.

In the meanwhile any commod stocks I dribble into need to survive at these prices.

 

[JohnDe]

There's too much copper around, even with the world going electric, our miners have no issues finding it.

Are We Going to Run Out of Copper?

It Is Highly Improbable!
Since 1960, there has always been, on average, 38 years of reserves, and significantly greater amounts of known resources (USGS data). In addition, recycling, innovation and mining exploration continue to contribute to the long-term availability of copper.

Despite increased demand for copper produced from ore in recent years, increases in reserves have grown, and there is more identified copper available to the world than at any other time in history.

In the period 2010-2020, 207 million tonnes of copper have been mined. In that same period however, reserves have grown by
240 million tonnes to 870,000 million tonnnes copper . This reflects additional exploration, technological advances and the evolving economics of mining.

Technology has a key role to play in addressing many of the challenges faced by new copper production. Known and as yet unknown innovations will ensure new mine production continues to provide vital copper supplies.

In addition copper recycling plays an important role in copper availability since today’s primary copper is tomorrow’s recycled material. Unlike other commodities such as energy or food, copper is not “consumed”. Copper is one of the few raw materials which can be recycled repeatedly without any loss of performance, and key stakeholders such as policy-makers, scrap collectors, copper producers and recyclers must all focus on ensuring that yesterday’s metal is recycled and re-used.

Long Term Availability of Copper

Long Term Availability of CopperCopper Reserves and ResourcesTypically, the future availability of minerals is based on the concept of reserves and resources. Reserves are deposits that have been discovered, evaluated and assessed to be economically profitable to mine. Resources are far bigger...

icsg.org

 

[moXJO]

Ok can't quote John's post for some reason.

But that's an interesting take. Everywhere else is pushing that copper is going to be scarce. Was watching a video of some big hedgefunds pushing the "scarcity" line as well.

 

[greggles]

I don't think anyone is denying that there is plenty of copper under the ground. However, until it is mined and processed it is effectively useless. Copper supply means copper that is ready for sale. It takes a long time and a lot of money to get copper out of the ground and the lower the copper price is the less copper will be mined because the economics of doing so become less favourable.

My thesis is increasing demand will pull the copper price up by its bootstraps. Companies with lower cost copper operations will do extremely well. But demand won't go away and supply will have trouble keeping up. As a result those looking to buy copper will have to pay more.

 

[peter2]

FCX - Freeport-McMoRan missed earnings today, revenue also down due to falling copper price. Expected market to hammer FCX price after the miss but so far it hasn't. Only 0.1% down (that's nothing). If FCX doesn't fall by >2% during the US session then I'm assuming that the price of copper has most likely hit the bottom (currently $3.30/lb, recent low 3.13).

 

[frugal.rock]

I'm surprised it's hit so low so fast.
Was out of everything copper before it breached $4
IMO, quite clearly getting primed for the next run up.

My thesis is increasing demand will pull the copper price up by its bootstraps.

Would agree, that and increased smelting/energy costs will pull it up alone without demand...

 

[InsvestoBoy]

Syncretica has the under https://syncretica.substack.com/p/meme-commodities

 

[divs4ever]

Ok can't quote John's post for some reason.

But that's an interesting take. Everywhere else is pushing that copper is going to be scarce. Was watching a video of some big hedgefunds pushing the "scarcity" line as well.

yes i have seen those opinions as well ( on the scarcity of copper ) but then sometimes those hedge-funds sell narratives that are slow to eventuate , like the 'excitement ' to mine uranium around late 2010

copper miners ( with the exception of OZL for me ) are not showing the investor support you would expect for the proposed 'electric/electronic revolution , maybe they will have plenty after they stop minting coins

 

[greggles]

Bottomed out at US$3.15/lb, now tentatively drifting north. Needs a catalyst for a more substantial rebound.

 

[JohnDe]

Ok can't quote John's post for some reason.

But that's an interesting take. Everywhere else is pushing that copper is going to be scarce. Was watching a video of some big hedgefunds pushing the "scarcity" line as well.

Those same hedgefunds that play the market to their benefit?

 

[frugal.rock]

30 day LME warehouse levels near a high, interestingly enough though,
other similar metals at a 30 day low... ?

I'm guessing that the supply will dwindle again on the cheaper prices.

For some perspective, the long term price average looks to be only a little lower than current prices.
That screams to me that copper is probably a bargain right now...
I won't mention Chile geopolitics either...woops, sorry.??

 

[JohnDe]

I don't think anyone is denying that there is plenty of copper under the ground. However, until it is mined and processed it is effectively useless. Copper supply means copper that is ready for sale. It takes a long time and a lot of money to get copper out of the ground and the lower the copper price is the less copper will be mined because the economics of doing so become less favourable.

My thesis is increasing demand will pull the copper price up by its bootstraps. Companies with lower cost copper operations will do extremely well. But demand won't go away and supply will have trouble keeping up. As a result those looking to buy copper will have to pay more.

The facts show that mining has been keeping up with demand for decades. Copper supplies is not an issue, people artificially keeping prices high by storing it has been the issue in the past.

As I've mentioned before, I've been watching copper for decades and only those in the know get rich from it.

Copper is a fairly common element, with an estimated concentration of 50–70 ppm (0.005–0.007 percent) in earth's crust (1 kg of copper per 15–20 tons of crustal rock).

Julian Simon was a senior fellow at the Cato Institute and a professor of business and economics. In his book The Ultimate Resource 2 (first printed in 1981 and reprinted in 1998), he extensively criticizes the notion of "peak resources", and uses copper as one example. He argues that, even though "peak copper" has been a persistent scare since the early 20th century, "known reserves" grew at a rate that outpaced demand, and the price of copper was not rising but falling over the long run. For example, even though world production of copper in 1950 was only one-eighth of what it was in early-2000s, known reserves were also much lower at the time – around 100 million metric tons – making it appear that the world would run out of copper in 40 to 50 years at most.

Simon's own explanation for this development is that the very notion of known reserves is deeply flawed,[39] as it does not take into account changes in mining profitability. As richer mines are exhausted, developers turn their attention to poorer sources of the element and eventually develop cheap methods of extracting it, raising known reserves. Thus, for example, copper was so abundant 5000 years ago, occurring in pure form as well as in highly concentrated copper ores, that prehistoric peoples were able to collect and process it with very basic technology. As of the early 21st century, copper is commonly mined from ores that contain 0.3% to 0.6% copper by weight. Yet, despite the material being far less widespread, the cost of, for example, a copper pot was vastly lower in the late 20th century than 5000 years ago.

 

[greggles]

The facts show that mining has been keeping up with demand for decades. Copper supplies is not an issue, people artificially keeping prices high by storing it has been the issue in the past.

As I've mentioned before, I've been watching copper for decades and only those in the know get rich from it.

Well, supply and demand have a way of finding an equilibrium, and that equilibrium is price. When there is more demand for copper than there is copper being mined, the price increases and vice versa.

The below 45 year copper price chart shows the price swings that illustrate how the imbalances between supply and demand have played out.

If there is some other factor at work other than supply, demand, inflation and global macroeconomics then feel free to elaborate further.

 

[JohnDe]

Well, supply and demand have a way of finding an equilibrium, and that equilibrium is price. When there is more demand for copper than there is copper being mined, the price increase and vice versa.

The below 45 year copper price chart shows the price swings that illustrate how the imbalances between supply and demand have played out.

If there is some other factor at work other than supply, demand, inflation and global macroeconomics then feel free to elaborate further.


View attachment 144399

I'm not sure what you are saying. That chart looks like the chart of any 60 - 100 year stock market, precious metals and minerals chart. Of course the price is going to go up, for the reasons you mention " demand, inflation and global macroeconomics", as well as those that you don't; market manipulation, war, disaster.

My original comment "there's too much copper around, even with the world going electric, our miners have no issues finding it", was made because for the last 30 years I have seen cries of an imminent copper shortage and I'm still waiting to see that come about. I have seen the market manipulated, I can't remember the specific time, I think it the 90's. A Japanese company had been stockpiling copper to cause an artificially high price, like the diamond industry. It worked for a while but then came crashing down.

Copper is very abundant, it is also very easily recycled, and technology keeps finding more efficient ways to dig it up and process it. At a worst case estimate, it's going to be about 15 years before copper supplies become an issue.

The facts are all out their for all to see, along with the stories of small investors thinking that they'd get rich from it. More have busted than have boomed, from copper.

All I'm saying is be careful of all the copper hype, it's not new.

Copper-bottomed booms and busts

Perhaps the most striking manifestation of the 2000s copper boom was the sight of charred human remains dangling from power cables.

www.winton.com