Copper | DALL*E3
It’s all about copper these days (well and gold) as the metal hits all-time highs.
This is in part as the London Metal Exchange and Chicago Mercantile Exchange banned Russian copper from trading on 12 April. This has created less supply pushing prices higher.
But copper demand is rising while production is lagging and new mines are certainly coming online. But demand is ramping higher driven by three clear trends.
Firstly increased energy needs, whether renewable or not, all require a lot of copper.
Secondly computer chips such as those used in AI from Nvidia require a lot of copper.
The third trend is electric vehicles (TVs) and while sales here have slowed in some markets that is to be expected as early adopters have bought leaving the rest of us facing higher cost vehicles. That said Chinese EVs are coming at really competitive pricing.
Chinese home construction used to also be a big demand point but that has stalled as the housing crisis continues. But the rest of demand seems to have swallowed that slack.
Price increases in a commodity will often see less use of the commodity. But in the case of copper the use in any product is usually a fairly small cost compared to the actual final price of the product, so price resistance is less likely.
This trend will play out of many years, decades even, and a pull back in the price is certainly possible and could offer a great entry for those wanting exposure.
Importantly copper is either price per pound or per ton. The chart below is per pound.
JSE listed ETN
- Name: Standard Bank Copper ETN
- Code: SBCOP
- TER: 0.35%
- Tax-free allowed? No
- (We have a recast with 1nvest on this ETN next Tuesday).
NYSE listed copper ETF
- United States Copper Index ETF
- Code: CPER
- TER: 0.97%
NYSE listed copper miners ETF
- Name: Global X Copper Miners ETF
- Code: COPX
- TER 0.65%
Lastly of course there are the JSE listed miners with copper exposure; Copper360, Anglo American, Glencore and BHP Group. But aside from Copper360 they all have other commodities as well diluting copper exposure.
All charts by KoyFin | Get 10% off your order
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