Copper is expected to rise to $4.5/lb according to BNEF.
copper
Copper/gold ratio vs 10 year yield
Copper Checklist
To be able to time the copper market you need to take into account a lot of things. Here is a checklist.
It’s derived from a panel of dollar-denominated global bulk dry cargo shipping rates.
It may be viewed as a proxy for the volume of shipping in global industrial commodity markets.
2) Copper/Gold Ratio
3) Copper LME Warehouse Stock
Whenever the LME/COMEX warehouse stock level drops, there is a shortage in copper and copper prices will rise. Also check the inventory in China. SHFE copper warehouse stock can be found here. SMM bonded warehouse copper stock level can be found here.
4) China Power Consumption
Watch China demand for copper. High power consumption means high China GDP and higher demand for copper.
The Shanghai Composite Index is correlated to copper price. This is because China heavily depends on commodities. We see a pennant formation shaping up and expect a breakout in 2021.
8) Supply and Demand
Always check that copper demand is higher than the supply of copper. Demand comes from the electrification trend. Supply is low. When mine supply goes down, copper typically moves higher.
On the supply side, miner Glencore will restart operations at the currently idled Mutanda copper mine in the Democratic Republic of Congo in 2022 (100K tonnes copper/annum) while in top producer Chile a strike at the world’s largest Chile’s Escondida mine threatens output (1.3 million tonnes copper/annum) and a strike at Andina Codelco copper mine (180k tonnes copper/annum) is looming. MMG’s Las Bambas copper mine (400k tonnes copper/annum) had a strike in October 2021 and will shut down in mid December 2021, but reopened in January 2022 and shut down again in April 2022. Teck Resources had a strike on 13 January 2022 (120k tonnes copper/annum). Kamoa Kakula is starting production this month and will ramp up to 400K tonnes copper per year in Q3 2022. Quellaveco will start production in 2022 for 300K tonnes per year. China announced it will release its copper stockpiles into the market (China sold 20K tonnes in June, 30K in July, 30K in September and 30K in October). Stockpiles are at 2 million tonnes). On November 2023, First Quantum indicated it will need to halt production at its Cobre Panama mine, representing 300kt of production or 1.5% of global supply. An indefinite union strike plan was announced at MMG’s Las Bambas copper mine in Peru starting Nov. 28 2023 (an ongoing issue at the mine since around 2016), representing another 400kt of copper production or 2% of global supply.
10) COT Report
Make sure the Australian dollar and the Chinese yuan are in an uptrend.
12) Technicals
Besides all these fundamental reasons above, you need to check the technical picture as well. Buy copper when there is a breakout. (Jesse Livermore: “Follow the path of least resistance”)
14) China Imports
17) Inflation
The Brave-Butters-Kelley Indexes (BBKI) are part of a research project from the Federal Reserve Bank of Chicago, and you can now find the monthly and quarterly BBKI in FRED.
The index is constructed from a large panel (490) of monthly measures of real economic activity and quarterly real GDP growth. Monthly GDP growth is indexed to the quarterly estimates from the U.S. Bureau of Economic Analysis and consists of three components: cycle, trend, and irregular.
Neutral price of gold and copper
Oil Vs. Copper demand
Copper Miner AISC
Copper price average (red) should be slightly above the AISC (green).
Copper grades are declining
Copper in EVs to double demand
Goldman Sachs Targets $7/lb Copper
Equivalent grade calculator
This is a nice calculator for equivalency of different metal grades.
https://www.juniorminingnetwork.com/drill-hole-calculator.html
Example: https://www.juniorminingnetwork.com/drill-hole-calculator/result/DHC64402e29ca969.html