(BFM Bourse) – The price of the red metal exceeded $10,000 on Friday, supported by significant demand which cannot be offset by supply with limited capacities.
The price of copper, the flagship metal of the energy transition, exceeded $10,000 per tonne on Friday for the first time in two years thanks to accelerating demand for limited production.
The red metal has been particularly in the spotlight since giant BHP’s hostile takeover offer for its rival Anglo American, which would give birth, if it materializes, to the largest mining and copper producing company in the world.
Since the end of February, the price of copper has gained nearly 18%, galvanized by fears of a significant deficit on the world market. On Friday, it climbed as high as $10,033.50 before falling back a bit.
“Over the past two months, the price of the metal has risen steadily, supported by global growth and strong demand,” amid insufficient mining supply and fears of shortages, says analyst Ole Hansen at Saxobank.
“Some fear” that a marriage between BHP and Anglo American “will further limit production growth, at a time when demand should increase given that the metal is vital for the green transition,” adds Fawad Razaqzada, analyst at City Index questioned by AFP.
A crucial metal for the “green” transition
Until then, the price of copper had moved within a tight range. He had managed to navigate “a choppy sea of significantly higher financing costs as central banks around the world raised interest rates to fight inflation,” explains Ole Hansen.
The post-pandemic years were also marked by a slowdown in growth in China, the world’s largest consumer.
But copper is crucial “for the green transition because of its use in renewable energy infrastructure such as solar panels and wind turbines, as well as in electric vehicles and grid modernization,” lists Fawad Razaqzada.
In addition to demand “from traditional sectors such as housing and construction”, the “king of green metals” is therefore seeing its demand explode due to the transformation towards low-carbon energy, insists Ole Hansen.
An offer under pressure
At the same time, supply is suffering from a combination of strikes, geopolitical tensions, new regulations and even a drop in yields from aging deposits.
The specter of shortages had already propelled the red metal to a historic peak in March 2022, at $10,845 per tonne, shortly after the start of the Russian invasion of Ukraine, with investors fearing that the war and Western sanctions against Moscow would reduce supply coming from Russia.
However, the copper mining supply from Chile and Peru, the two leading producing countries in the world, was “stronger during the first two months of this year than the previous year”, underlines Thu Lan Nguyen, analyst at within Commerzbank.
However, she recalls that in the case of Peru, this increase in production is due to a favorable comparison effect because last year, “demonstrations had harmed production”.
“The industry is not immune to unexpected interruptions,” the analyst also recalls, as shown by the example of the November closure of the largest open-cast copper mine in America central located in Panama following major demonstrations.
(With AFP)
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