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Heavy Metals: Copper is shining, but what’s on the horizon?

COPPER: It’s been a bright year for the red metal, which has seen strong momentum. As demand for EVs is forecast to increase significantly, the need for copper is also expected to surge
copper industrial
Eyes are on copper for 2019, with tight supplies and expectations of strong demand pushing up prices

Welcome to Heavy Metals, Proactive's weekly commodities report.

Each week, we pick one commodity and dive in – what’s been happening, where it's headed, what factors are at play and how are markets responding?

This week we're digging into copper.

Summary

It’s the third-most-used industrial metal in the world (after iron and aluminum) – and it’s been on a shining path upward lately. Meet copper – a soft, malleable metal with high thermal and electrical conductivity.

Most of us are familiar with the pinkish-orange colour of the metal when pure and a turquoise colour when it's oxidized. Copper has been in use fior at least 10,000 years, but more than 95% of all copper ever mined and smelted was extracted since 1900 – with more than half extracted in the last 25 years.

The metal is used for many things: about 60% of its demand comes from wiring. It’s widely used in piping and roofing, around 20%, and machinery around 10%. From a sector perspective, copper demand is made up of about 65% electrical, 25% industrial and 10% transportation.

Demand for EVs will help boost copper

It’s important to point out that in an age of electrification, copper is king. And as demand for electric vehicles is forecast to increase significantly over the next 10 years as technology improves, many analysts and forecasters expect the need for copper to surge.

Copper has the highest conductivity of any non-precious metal, and plays an important role in all energy production, but it's particularly important for sustainable technology applications like electric vehicles. The metal increases the efficiency and reliability, but most importantly it's a sustainable material, meaning it's 100% recyclable without loss of properties.

Price of copper jumps

Copper prices had their biggest monthly rise in February since December 2017, as concern over US/China trade talks and weak factory prices were offset by falling stockpiles, pointing to a tight market.

Benchmark copper was up around 5.5% in February for its second consecutive monthly gain. Benchmark copper on the London Metal Exchange (LME) was hovering around US$6,478 a tonne on Friday.

Copper seen as a barometer of economic health

Historically, while the price of copper has been somewhat unstable, the prevailing view is that when the economy does well, copper does well. Copper is basically seen as a barometer of economic health, which means eyes are on it these days, particularly in light of events like President Donald Trump’s trade talks with China.

Because the metal touches so many corners of the economy – homebuilding, construction, manufacturing, power generation, electronics and transportation – it has proven to be an indicator of economic health.

What’s ahead?

Eyes are on copper for 2019, with tight supplies and expectations of strong demand pushing up prices.

There is potential for significant growth thanks to copper’s exceptional electrical conductivity and the lack of a competitively priced alternative.

Copper could continue to rise thanks to increased demand for renewable energy and electric vehicles as well as a looming supply gap.


Chart of the week

Over the last three months, high-grade copper prices dipped into January and have spiked since then.


News round-up

Hannan Metals doubles land position at the San Martin copper project in Peru

Hannan Metals Ltd (CVE:HAN) (OTCPK:HANNF) announced Monday that it has doubled the area under mineral claim application at the San Martin sediment-hosted copper-silver project in north-central Peru.

Constantine Metal Resources preparing for a very big 2019

Constantine Metal Resources (CVE:CEM) VP of Exploration Darwin Green sat down with Steve Darling from Proactive Investors Vancouver to share details of what will be a very busy 2019. Green telling Proactive about their copper project Palmer and also on their gold venture Johnson.

Thunderstruck Resources to partner with Japan's JOGMEC on Fiji property

Thunderstruck Resources Ltd (CVE:AWE) (OTCQB:THURF) has announced a  joint venture deal with the Japanese government group, Japan Oil, Gas and Metals National Corporation (JOGMEC) to develop its Wainaleka VMS (volcanogenic massive sulfide) discovery in Fiji.

 

Contact Katie Lewis at [email protected]


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