Developing Resilience Against Volatility
Metelec MD Kevin Draper looks at the future of the copper market amidst unprecedented global volatility
We are currently experiencing a period of global financial volatility and uncertainty, characterised by high inflation and slow growth in many major economies.
Financial leaders across the globe are anticipating yet more turmoil as USA President Donald Trump prepares to announce tariffs on the country’s trading partners on April 2 in what he is calling “Liberation Day”.
We have already seen the initial ripples from Trump’s 25% tariffs on car imports to the US and it looks like that is just the start as the President targets the ‘Dirty 15’ – the trade partners with whom the US has the biggest trade imbalances.
In the UK, we appear jammed in a period of miniscule growth and near-stagnation.
Against this backdrop, as you’d expect, copper prices have also been extremely volatile.
On the London Metal Exchange, last year prices started and finished at around $8,600-$8,700 per tonne – but prices cycled twice beyond $10,000 per tonne, with a record of $10,889 in May. As I write, we are hovering near the $10,000 mark once again.
Meanwhile, prices with the US COMEX recently touched a high of $5.374 a pound, topping the previous all-time industry high, achieving a spot and three-month premium to the LME of almost $1,200 per tonne.
Trump now sees copper and its availability as a potential national security risk with near-term strength in demand, and prospects for developing new mining capacity lead-times to span decades. As a result, Phil Lynn, senior market analyst at the Prices Futures Group, has labelled the metal the “new hottest commodity on the globe”, adding: “Everybody needs it, and we probably don’t have enough of it.”
As I’ve previously highlighted, the growth sectors of tomorrow all rely heavily on copper. They include electric vehicles (EVs) and data centres, both of which utilise enormous amounts of copper.
It’s a core component for power and information distribution in our day-to-day lives and will only grow in importance as these sectors develop at pace.
At Metelec, we have consciously aligned ourselves to data centres and EVs and have achieved impressive acceleration as a result. Across our UK and Ireland operations, we have grown around 20% this year and we have significantly increased the volume of value-added components having developed the capability to deliver ‘ready to assemble’ kits of parts at scale.
Working with our parent group Gindre, we have taken steps to improve our resilience to volatility. We are positioned to control the controllables and to continue supplying industry-leading busbar solutions.
As copper availability tightens, we 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.
Large-scale primary copper smelting for the Group is carried out by Montanwerke Brixlegg in Austria, dramatically decreasing our reliance on primary mined copper production while reducing the environmental burden.
Establishing ourselves as a trusted supply chain partner is key. Our close relationship with Gindre means we can provide supply chain solutions, booking capacity up to one year in advance. In most cases, we can supply products in around four to six weeks because we already have machines booked with Gindre.
Talk to us today about how we can add value to your supply chain – or even create a new one tailored to meet a market need – bringing security and dependability to your operations.