Copper is becoming the next essential industrial commodity, reflecting the rise in oil prices in previous decades, a leading commodities analyst said.
This time, new forces in the economy, namely the advent of artificial intelligence, the explosion of data centers and the green energy revolution, are increasing demand for copper, while the development of new weapons is also increasing it, according to Jeff Curry, director of strategy at Energy Pathways. at Carlyle.
“Copper is the new oil,” he said. Bloomberg TV on Tuesday, noting that his conversations with traders also add to his optimistic outlook. “This is the most compelling deal I’ve ever seen.”
Copper has long been a key industry leader, with its uses ranging widely from manufacturing and construction to electronics and other high-tech products.
But the billions of dollars being poured into artificial intelligence and renewable energy are a relatively new part of copper’s prospects, Curry noted, acknowledging what he has done similar forecast in 2021 when he was an analyst at Goldman Sachs.
“I’m confident that this time is the time to take off, and I think we’ll see even more momentum,” he said. What has changed this time is that there are now three sources of demand – artificial intelligence, green energy and military forces, rather than just green energy three years ago.
And while demand is high, supply remains limited as new copper mines can take 12 to 26 years to come online, Curry said.
According to his forecasts, this should ultimately lead to an increase in prices to $15,000 per ton. Copper prices are already at record highs, with benchmark prices in London around $10,000 a tonne, more than double pandemic-era lows in early 2020.
At some point, the price will become so high that it will lead to “demand destruction,” meaning buyers will refuse to pay as much. But Curry doesn’t know what level that is.
“But I go back to the 2000s, when I was bullish on oil, just like I am bullish on copper today,” he added, recalling that at that time oil jumped from $20 to $140 a barrel. “So the upside potential for copper prices here is very significant.”
Copper also played a key role in BHP’s takeover 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 the sale of its diamond business to De Beers.