Monday, April 26, 2021

"Metal Boom: Copper Hits 10-Year High Amid Supply Constraints And Infrastructure Plans"

 U.S. futures up 0.1035 (2.39%) at 4.4395

As noted in Friday's "Copper: Chartology

U.S. futures are trading up about 1% at 4.3190 and around a nickel below the late February spike high, 4.3755. If (when) that level is hit you have to go back to 2011 to find higher prices. And they aren't that much higher. It's a dangerous little game to trade in anticipation of a breakout but since 3.99 on the futures it looked as if the stars had aligned....

It's going higher. While there may possibly be a violent downtick when the folks in Chile get to withdraw funds early from their pensions and the strike ends, the next two years will see fortunes built in copper.

From ZeroHedge: 

Copper futures hit their highest levels in ten years on Monday as several factors, including supply concerns, a weaker dollar, the Biden administration's plan to improve infrastructure, growth in renewable energy, and China's increasing demand, continue to fuel expectations of higher demand for the industrial metal.

The dollar continues to edge lower Monday amid speculation Federal Reserve Chairman Jerome Powell will not announce tapering at this week's meeting, fueling higher copper prices. 

Meanwhile, traders are concerned about supply due to a strike in Chile. 

"We are in for a good run higher as we are having supply issues. Chilean port workers threatening to strike, which is a short-term issue, but will cause some trouble for shipments into China in an already tight concentrate market," commodities broker Anna Stablum of Marex Spectron told Reuters

"We are seeing some concerns about supply cuts in China due to environmental pressures," Stablum added.

The resilience of copper prices suggests industrial use for copper in China continues. 

The push for a massive infrastructure overhaul in the US has provided support for copper. The Biden administration proposed infrastructure investments of hundreds of billions of dollars to fuel growth in renewable energy. 

When it comes to renewable energy, copper plays a huge role in renewable energy technology, given its conductivity characteristics. 

On top of renewables, a shift towards a digital economy and rising demand for electronics to support the remote work lifestyle adds additional support to copper prices. 

"Technology, semiconductors, data centers, and cellular towers all require significant copper usage," Rob Haworth, senior investment strategist at US Bank Wealth Management, told MarketWatch

Meanwhile, "we have not seen an investment in new copper supply over the past few years, which means users have been competing for the relatively scarce supplies of copper, leaving price as the arbiter of who receives this supply," Haworth said. "Mine development is a long-term activity, leaving us with a tight market for some time."

Goldman Sachs recently called "copper the new oil." ...MORE

Copper: "Record copper scrap flows this year won't plug deficit"
"METALS-Bullish investors push copper towards 10-year highs"

 "Copper heads for biggest weekly gain since February"
The move is only beginning....

And via the FT's Natural resources editor: 

"Chinese Firms Position for an Energy Transition Copper Supercycle" 

Wood Mackenzie: "Build Or Buy: Are The Copper Majors Rising To The Growth Challenge?""