Copper is hitting record highs.
Some are even calling COPPER the NEW OIL.
There are 4 CRUCIAL reasons for this.
Short thread below! 👇👇👇
1.1/ DECARBONISATION
“After a year of the global pandemic, with its supply chain disruptions, race for PPE, testing kits and vaccines, the critical importance of securing sufficient raw materials in combating society's problems has never been more in focus.” - Goldman Sachs
1.2/ DECARBONISATION
This doesn’t stop with the pandemic, though…
It extends to the next biggest challenge of our time: climate change.
No decarbonisation without copper.
2.1/ THE COPPER MARKET
With an entire decade of poor returns, investment in future supply growth has been reduced…
It takes decades and billions of dollars to bring a copper mine into production.
2.2/ THE COPPER MARKET
Since COVID-19 stimulus has increased demand, and with no massive increase in supply, the copper market is not prepared for the current demand environment.
2.3/ THE DEFICIT
Though copper prices have rallied 80% in the last 12 months, there have been no material greenfield project approvals.
The current deficit indicates a supply gap of 8.2Mt by 2030. TWICE the size of the gap that caused the copper bull market in the early 2000s.
3/ PATH TO 15K
Current copper prices are too low to prevent a near-term risk of inventory depletion.
We need a price path that avoids depletion AND a sharp surplus swing.
According to Goldman Sachs Jeff Currie copper could reach +$6.80lb by 2025.
4/ COPPER MONTHLY CHART
We may get there sooner than he thinks:
“Copper has broken out to fresh all-time highs above the 2011 high at $4.65.
The breakout introduces the potential for copper to potentially TRIPLE over the next 3-5 years.” (analysis from an investment bank)
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