Copper supplies are dangerously low and can only cover less than 5 days of global demand, top commodities trader says

Original article here

The global supply of copper is running dangerously low, according to top commodities trading firm Trafigura.

Kostas Bintas, Trafigura’s cohead of metals and minerals trading, said at the FT Mining Summit on Thursday that inventories can currently cover 4.9 days of global consumption and could finish the year at 2.9 days. For comparison, copper inventories are typically counted in weeks.

Copper is an essential material that is purposed for use in machinery, smart phones, EV batteries, plumbing, and even wind turbines because of its ability to effectively conduct electricity.

While the collapse of China’s property market has weighed on copper demand, the growth of renewable-energy technologies more than makes up for that and will drive supplies lower, Bintas said, noting that the European Union has accelerated its target for doubling solar energy capacity.

“While there is so much attention being paid to the weakness in the real-estate sector in China, quietly, the demand for infrastructure, electric-vehicle-related copper demand, more than makes up for it,” he said, according to the Financial Times. “It actually not only cancels completely the real estate weakness, but also adds to their consumption growth increase.”

The shrinking inventory increases the risk of an unanticipated spike in prices as traders rush to ensure supply needs are met. Copper is currently trading at just below $7,400 per ton, still 30% lower than the March peak of $10,000 per ton.

Bintas said prices have slipped due to recession fears but sees copper recovering quickly after those fears ease. However, he stopped short of reiterating his prediction last year that copper would hit $15,000 a ton.

“I think it’s fair to assume a higher price of what we have today,” he said. “Is it going to be more than $15,000? I think time will tell.”