Earlier in January, copper was trading at the highest price recorded in nearly eight years. The price of the metal increased in February with forecasts showing that this trend will continue in March. However, investors wager that as the world slowly recovers from the effects of the coronavirus pandemic, the supply tightness of copper will grow.
Senior StoneX metals analyst Natalie Scott-Gray predicts that this year the demand for copper will increase by roughly 5%, which will overtake the metal’s supply, which shortage she expects to rise by 2.3% annually.
If Scott-Gray’s forecasts are spot on, this would mean that the global supply of copper would move from a small surplus last year to a possible deficit of more than 200,000 copper tons in 2021. She added during an interview that the firm did not anticipate a recovery in the metal’s global supply in 2021. As of February 19, copper inventories in the LME’s registered warehouses were trading at 75,700 tons.
According to a report released by Bloomberg, the physical copper market in some areas is battling tight supply, with more pressure soon to come as smelters in China deal with contracting profit margins for processing raw copper ore into refined metal. Copper treatment charges, which are used as an indicator for refining margins, are at $50.16 per ton, the lowest in nearly a decade.
Scott-Gray forecasts that the demand for copper outside China will begin to increase during Q3 of this year, as lockdowns imposed in some countries due to the coronavirus pandemic, particularly nations in the west, start to ease. Among other things, she notes, the demand for the red metal will be driven by the 5G network, energy storage and the electric vehicle (“EV”) industry.
At the start of February, Reuters released a report that quoted the European Automobile Manufacturers’ Association as stating that the European Union should aim to have a million electric vehicle charging ports by 2024 and 3 million ports before 2030, in order to support the electrification of Europe’s car industry. The electric vehicle sector in Europe is among the fastest-growing EV sectors worldwide, which means the demand of copper is bound to increase as time goes by.
Thus far, the increasing prices of copper have grown the metal’s share prices for miners, with some having increased by double digits earlier in the year.
Scott-Gray also noted that forecasts show that over the medium term, the price of copper would remain on an upward trend. However, in the long term, as the metal’s demand grows more slowly and the primary supply side recovers a little, the red metal’s price will begin to plateau.
Copper isn’t the only metal seeing a surge in its price. Due to stimulus measures instituted around the world, gold has become more attractive as a store of value, and GoldHaven Resources Corp. (CSE: GOH) (OTCQB: GHVNF) is set to reap from the record-high prices of gold as it exploits its seven newly acquired properties in Chile.
NOTE TO INVESTORS: The latest news and updates relating to GoldHaven Resources Corp. (CSE: GOH) (OTCQB: GHVNF) are available in the company’s newsroom at http://ibn.fm/GHVNF
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