Copper prices have plunged deeply since early May as commodities have fallen and they still remain bearish. The past decade has been choppy for copper, which closed lower than 2010, but this decade copper is likely to be one of the best trades.
It is well understood at the government level that we will need a lot of copper in the green transition that was initiated by the elites and that the existing mines are not enough. At the same time, investors are hesitant to invest in the construction of new mines due to the downward trend in spot copper during the summer and low prices, as well as inflationary increases in mine construction costs. everywhere.
I’m tempted to think this is such a well understood story that there’s no money to be made, but if you look at how copper miners trade, that’s not the case at all . The general consensus is that the great shortage will emerge in 2024 or 2025 as the green transition accelerates and China rebounds, but at some point there will be storage before that.
Is this happening now? Bloomberg Noted that Thursday’s 2.4% copper rally was the largest one-day rally since early June and that first-month copper in London is trading at a premium of $145/tonne in month three. This type of backwardness is usually a sign of a tight physical market.
Copper Weekly Chart – The 200 SMA Held as Support
Can the rebound continue higher in copper?
China has been experiencing an economic slowdown, but even so, imports there have risen 8.1% so far this year through September. At the same time, Chilean copper exports have been declining since the beginning of the year. ZeroHedge too wrote this week about the impending copper shortage and cites a report from S&P Platts that warns that the green transition could be derailed by the unavailability of copper.
Again, all of this is well known to anyone paying attention. It all really comes down to the question of when to buy copper. It is certainly cheap now but it has fallen due to economic concerns. However, note that copper prices have held up better than many risky assets lately. The weekly chart here also shows that it has found support at the 61.8% retracement of the 2020-2022 rally.