First time in 2 years! Copper price breaks through the $10,000 mark
Driven by tightening supply, copper prices have risen by over 17% since the beginning of this year. In terms of news, BHP Billiton's plan to acquire Anglo American Resources has further increased the attractiveness of copper assets
As supply and demand tighten, copper prices have continued to rise this year.
On Friday, April 26th, the London Metal Exchange (LME) copper futures price broke through $10,000 per ton for the first time since 2022.
On the news front, according to media reports, the world's largest mining company, BHP, launched a takeover bid for the mining giant Anglo American Resources, valuing it at £31 billion, further enhancing the market attractiveness of copper assets.
According to previous analysis, once this acquisition is completed, it will be the largest restructuring in the industry in over a decade, creating the world's largest copper miner, accounting for approximately 10% of global mine supply.
However, the day after the bid was launched, Anglo American officially rejected BHP's acquisition proposal, stating that they did not see the attractiveness of BHP's takeover bid.
Why are copper prices hitting new highs?
The rise in copper prices is mainly driven by tight supply and demand. On the one hand, disruptions on the supply side have raised concerns about a shortage of copper supply, while on the other hand, the global manufacturing recovery and energy transition have boosted demand for copper.
As the industry's supply-demand gap continues to widen, it is widely expected that copper prices will continue to rise.
Firstly, as one of the most important base metals, copper is expected to be widely used in electric vehicles, the electricity grid, and other renewable energy sectors; secondly, the construction and development costs of major mines are also increasing.
Yongcheng Zhao, Chief Copper Analyst at Benchmark Minerals Intelligence, wrote in an email:
"The lack of new copper resources is a major obstacle to the energy transition, and mining companies are facing increasing resistance in building new mines, forcing them to merge to achieve growth."
Next milestone: $12,000?
Goldman Sachs previously forecasted that copper prices will hit a historical high of $12,000 per ton in the next 12 months, and Olivia Markham, a fund manager at BlackRock, also stated this Wednesday that copper prices must exceed $12,000 to stimulate investment in developing new mines.
However, there are still cautious views.
Some investors point out that current copper inventories are relatively high, premiums are declining, and futures prices have been consistently higher than spot prices, indicating an expectation of increased supply. Under the combined effect of these factors, copper prices may experience a pullback.
So far this year, London copper has risen by over 17%.
