The Next Big Bull Market Could Be Copper – by Megha Mandavia (Wall Street Journal – May 2, 2023)

Cyclical headwinds could limit gains in 2023, but demand, driven by green power, looks likely to outstrip supply growth

Glencore’s aggressive pursuit of Canada’s Teck Resources has put a spotlight on the race to secure access to copper. Traditionally seen as a cyclical economic indicator, the metal is also poised to play a key role in the world’s green transition—which is being supercharged by recent legislation, including the U.S. Inflation Reduction Act (IRA), passed last year.

Green technologies including electric vehicles and solar panels use more copper than equivalent fossil-fuel-based technologies, and supply growth looks likely to fall far well short of demand over the coming decade.

In early and mid-2023, the slow pace of China’s property recovery and global economic headwinds could limit the upside for copper, currently trading around $8,500 metric ton. But the long-run outlook is quite different.

U.S. demand, long dwarfed by China’s, will be key. The IRA offers beefy tax credits and other support for clean-energy projects including wind farms, batteries, solar and hydrogen. Goldman Sachs reckons that between 2023 and 2030 it could increase average annual demand by about 180,000 metric tons, or roughly 1% of current global consumption.

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