Trafigura (Trafigura), the world's largest copper trader, expects prices of major raw materials to rise further as global investment in renewable energy and electric vehicle infrastructure surges in the coming years, according to foreign websites. Due to the global demand for decarbonization, the price of copper will reach 15000 US dollars per tonne in the next decade.
Even in the early days of the COVID-19 epidemic, Trafigura thought copper prices would rebound. Indeed, LME copper prices have soared over the past year, more than doubling to $9617 a tonne at one point. Trafigura believes copper prices will soar to a record high of more than $10000 a tonne as Western economies emerge from the novel coronavirus epidemic and the arrival of the Green Revolution, Trafigura's head of copper trading, Kostas Bintas, said in an interview.
Bintas said copper prices will continue to strengthen in the Covid crisis, which is exactly what is happening. Compared with the increase in copper consumption over the past year, which is mostly concentrated in China, the rest of the world will be the main factor in the increase in consumption after the epidemic.
Trafigura expects LNE copper prices to break through $10000 a tonne this year and then enter a range of $12000-15000 a tonne over the next decade. Other bullish copper bulls, including Goldman Sachs, Bank of America and Hula Group, have similarly strong near-term forecasts, but Trafigura's ambitious goals are more unusual.
Goldman Sachs expects copper prices to reach $10500 a tonne within 12 months, while (Citi), the hua flagship bank, expects copper prices to reach $12000 a tonne next year. According to Trafigura, this is likely to be the bottom line in the next few years as the industry revalues metal prices.
Graeme Train, senior economist at Trafigura, said copper demand in China is strong, but in other parts of the world, it is also starting to see an improvement in demand.
A surge in demand
Trafigura sold 4.4 million tons of copper in 2020, making it the world's largest copper trader. Unlike Glencore, Trafigura has avoided buying mines or even plans to sell mines it operates in Spain, and its profits come mainly from the physical copper market.
Trafigura has been investigating customers throughout the industry during the outbreak. Research shows that there was a rare surge in demand in both Europe and the United States before the new energy infrastructure stimulus package took effect. In Europe, demand has been growing at a rate of nearly 5 per cent compared with the first quarter, a marked shift from the sluggish industrial growth rate that has been in the doldrums for much of the past decade.
Investors who have been pouring into the market over the past year and mining companies that have enjoyed huge profits support Trafigura's bullish view of copper. But the consumer side takes the opposite attitude.
Some leading copper manufacturers are already warning that soaring prices will prompt buyers to look for alternatives, such as aluminium in conductive wires. High prices will also prompt traders to increase their purchases of scrap copper.
Inventory decline
However, Trafigura believes that with the advent of the green revolution, supply pressure will be too great to prevent prices from soaring.
The outbreak has caused heavy losses to the supply of scrap steel and mineral copper, resulting in a sharp decline in global inventories over the past year. As inventories approach critical levels, any further disruptions could start to have a big impact on prices, Trafigura said. They believe that when copper reaches a low inventory environment, people who really need copper have to pay a high price to buy it.
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In addition to the futures market, Trafigura expects some profound changes in the industry as the copper concentrate market falls further into shortage. The processing fees charged by smelters are already at their lowest level since 2010. While this will put severe pressure on smelters' profitability, tight supply of refined copper will spur higher freight charges paid by customers. But at the same time, by-product prices are also likely to rise, partly offsetting the impact.
The looming green revolution has boosted the outlook for many industrial metals, prompting some analysts to say commodity markets are embarking on a new supercycle. But Trafigura said the tight supply of copper made it different and supported the bold bullish view of prices by trading companies. 'i 'm not sure if it's a commodities supercycle, but I'm 100% sure it's a copper supercycle, 'Bintas said.
