Copper price surges as mining stutters and US demand drives the Futures Price Point

Metelec MD Kevin Draper discusses the copper market as prices soar above $10,000 a tonne

The price of copper has surged to a two-year high – highly volatile and perhaps more to run.

Prices have climbed well above $10,000 a tonne as we enter what some analysts are calling “the copper age”.

As I’ve previously highlighted, the growth sectors of tomorrow all rely heavily on copper. They include electric vehicles (EVs), data centres and renewable energy generation, all of which utilise enormous amounts of copper.

Significant investment is required to increase mining to meet this demand. However, higher interest rates, environmental opposition and political constraints have combined to make investors reluctant to provide funding for new mining activity.

This has and will affect supply and, ultimately, the price of copper will need to increase even further to persuade the large mining companies to invest in mining capacity to deal with the anticipated demand. We now see further consolidation activity amongst the global miners as they consider this.

There could be a bumpy road ahead. In the short term the strength of the US market supported by the Biden IRA has driven a rapid ‘futures’ CME premium to the LME in the month of May.

That is creating a honey pot for the physical flow of the red metal to the region as traders shore up short positions. Those physical flows cannot be satisfied by material of Russian and Chinese origin and it remains to be seen if sentiment and copper valuation is affected when and if a) China starts to export cathodes due to continued weakness in their construction sector, and b) the political situation ahead of the upcoming US election.

Copper availability will continue to tighten over the medium term. Metelec will continue to invest in the required stock range from a position of financial strength, and supply security will result from a continuously improving Group vertical supply chain and co-operation with other international supply partners.

A core strength of our vertically integrated Group is that primary copper is refined from 100% recycled source via our parent companies Gindre and UMCOR. Large-scale primary copper smelting is carried out by Montanwerke Brixlegg in Austria. This dramatically reduces the environmental burden and reliance on primary mined copper production.