Copper price analysis as star hedge fund manager raises target

on May 24, 2024
  • Copper has jumped sharply this year and is now sitting at its all-time high.
  • Pierre Andurand, a well-known trader, has raised his forward guidance.
  • He expects that the price of copper will jump to over $40,000.

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Copper price is having a remarkable year as it soared to a record high this month amid demand and supply dynamics. The price soared to over $10,000 for the first time on record, joining other metals like gold, silver, platinum, and nickel in a strong rally.

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Copper’s demand and supply imbalance

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The main driver for copper is that demand is growing at a slower pace than supply, which explains why BHP has made a bid for Anglo American

In a recent note, the International Copper Study Group slashed its copper supply for the year. It estimates that the industry will have an oversupply of about 162k tons this year, a smaller figure than the previous guidance of 467k tons.

In the future, however, the agency expects that the industry will move into a deficit because of the rising demand. Most countries are increasing their investments in electricity generation and transmission while data center demand is surging. 

Further, while the electric vehicle industry is slowing, it is still growing by double-digits. EVs use more copper than Internal Combustion Engine (ICE) vehicles. 

Meanwhile, copper’s supply is slowing, with most mines being decades old. And permitting of new copper mines is taking over a decade. In the US, regulators denied approvals of a road project to a big Alaska mine while Panama recently rejected the approval of a $10 billion mine. 

Some copper miners have also slashed their production outlook. Codalco, the biggest copper mining company in the world, produced its lowest copper in a century in Q1. 

Copper price chart

Pierre Andurand is bullish on copper price

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Therefore, while copper price has jumped, analysts believe that it has more upside. In an interview with the Financial Times, Pierre Andurand said that the price would surge to over $40,000 in the next few years.

Andurand is one of the best-known commodity traders in the world. Most recently, he has made a fortune as the price of cocoa surged. He said:

“I think we could end up to $40,000 per tonne over the next four years or so. I’m not saying it will stay there then; eventually we will get a supply response, but that supply response will take more than five years.”

Andurand joins other heavyweights who have a bullish copper price forecast. Goldman Sachs, which named copper the new oil in 2022, estimated that the metal would continue soaring in the near term as demand rose.

Meanwhile, Morgan Stanley warned that the supply squeeze will continue because of the supply and demand imbalance.

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