Copper Market Research

  • Copper experienced a massive drop during the 2008 financial crisis.
  • Subsequent confidence saw huge gains into 2011.
  • Post-2011 slowdown of global growth saw copper lose 50% of its value.
  • During slowdown many mines closed or began high-grading operations. Extracting only highest-grade ore in response to low prices. These operators have to deal with higher production costs in a bull market to compensate for past practices.
  • Regardless of price, overall production has been trending consistently higher year-over-year.
  • Escondido, the worlds largest copper mine produces 1.1 million tonnes annually. The equivalent amount must be added every 2-3 years to keep up with projected demand.
  • The boom in Electric Vehicles (EV) is about to drive demand (and price) exponentially.

Copper (Cu) Market Drivers

  • Electric Vehicles (EV): 4 times more Cu per vehicle.
  • Internal Combustion versus EV: average 23kg of Cu. vs. average 83kg of Cu.
  • New Copper demand predicted to grow from 185,000 tonnes (2017) to 1.74 million tonnes (2027) –a ninefold increase – driven by EV adoption.
  • In addition, vehicle chargers add 0.7kg Cu each. Fast chargers add 8kg each.
  • OECD/IEA 30@30 campaign set a goal for member nations to achieve 30% EV market share by 2030.
  • By 2025 they predict between 40 to 70 million EVs.

Copper Market Economics

  • Copper gained 70% since the beginning of 2016.
  • Price jumped after China cuts scrap imports by 94%.
  • Copper saw longest rally this year amid supply concerns (Dec 2017).
  • Traded at $3.30 /pound in NY; up 30% in 2017 recovering from six-year lows struck early in the year.
  • Trump administration started price run with plans of massive infrastructure investments.
  • Goldman Sachs: “expect strong demand & cost inflation to drive the price higher in 2018.”