Copper is emerging as the next indispensable industrial commodity, mirroring the rise of oil in previous decades, a senior commodity analyst said.
This time, new forces in the economy, namely the rise of artificial intelligence, the explosion of data centers, and the green energy revolution, are boosting demand for copper, while the development of new weapons is adding to it as well, according to Jeff. Corey, chief strategy officer at Energy Pathways in Carlisle.
“Copper is the new oil,” he said. Bloomberg TV on TuesdayPointing out that his conversations with traders also reinforce his upward trend. “It’s the highest condemnation trade I’ve ever seen.”
Copper has long been a major industrial leader with its uses ranging widely from manufacturing and construction to electronics and other high-technology products.
But the billions of dollars flowing into artificial intelligence and renewable energy represent a relatively new part of copper’s outlook, Currie noted, acknowledging that it has had significant success. Similar forecasts in 2021 When he was an analyst at Goldman Sachs.
He said: “I am confident that this time is the take-off stage, and I think we will see more momentum behind it.” What’s different this time is that there are now three sources of demand — artificial intelligence, green energy, and the military — instead of just green energy three years ago.
Although demand is high, supply is still limited, as new copper mines could take between 12 and 26 years to become operational, Currie noted.
He expected that this would eventually lead to prices rising to $15,000 per ton. Copper prices have already reached record levels, with benchmark prices in London at around $10,000 a tonne, more than doubling from pandemic-era lows in early 2020.
At some point, the price will rise to the point that it will “destroy demand,” meaning buyers will be reluctant to pay as much. But Corey doesn’t know what that level is.
He added, “But I go back to the first decade of the twenty-first century. I was as optimistic about oil at that time as I am about copper today,” recalling that the price of crude oil rose from $20 to $140 per barrel at that time. “So the upside for copper here is very significant.”
Copper was also a key catalyst in BHP’s bid for Anglo American, a $40 billion deal that would create the world’s largest copper producer. But Anglo rejected the offer and recently announced plans to restructure the group, including selling its diamond subsidiary De Beers.
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