Thread by @BambroughKevin

Copper thoughts:

USA recycles nearly as much copper as is derived from newly mined ore... but wire production typically is made only from new mined copper.

The effort to ‘double the electrical grid’ by 2040 to power electrical vehicles will therefore create an incredible demand for newly mined copper. Transmission lines, generation and in the vehicles themselves.

EV (cars) typically 3 times the amount of copper.

Ev buses and trucks will use 10-15x the amount of copper. Infrastructure bills the are being passed the world over.

As a result recycling supply/demand for won’t be increasing nearly as much as the demand for new mine supply.

It likely that a 25% demand growth for copper will nearly all fall on new mines and require a 50% increase in output. If over all #copper demand were to rise by 50% over 5 years then it’s likely that new mines demand would be up 100%

There is simply no way in hell that mine supply will be able to rise as quickly as demand will over the next decade. The amount of money that is going into EV’s and infrastructure will easily push copper over $8/lb

As a general rule when a commodity makes a new all time high after a 10+ year bear market it typically doubles quickly. I think #copper will spike to $10/lb in the next 2 years. Then settle in the $6-8 range as new supply is ramped up and some demand destruction takes place.

Here’s a long term copper chart. Broke out to a new all time high in the early 70’s after 10 ranging and doubled.

The early 2000 break out led to the $1.50 to $4 move. This next #copper break out will be spike to $10 imho

The move to EV’s is so huge for copper. It’s transformational for the industry. A historic evolutionary moment. Moving the global vehicle fleet to electric power will require a Herculean effort. Many commodities will be strained and spike in the process

“There are roughly 180 pounds of copper in every electric vehicle” I don’t think $tsla or any auto manufacturer will slow car production because they have to pay another $500-$1000 #copper it’s will just be a cost they need to pass on.

They auto industry is investing massively to convert their production to solely EV’s. They won’t reverse course due to a #copper spike. They will look at a spike to $10/lb as temporary. They will also contract directly with miners entering into long term supply agreements.

Spot my spike to $10/lb but many miners will be happy to bring on new production and agree to contract with floor and escalator at a price that yields a great return. That’s why I think the $6-8/lb range is a good target for the next 10-15 years for modelling.