The physical market for copper is “very, very tight and now in deficit”, and with the Federal Reserve rate cut on the horizon, the metal is set to explode this year, said Robert Friedland in an interview with Bloomberg this week.
According to the copper mining executive, the dollar-denominated price of the metal is likely to “go up a lot” by the middle of the year. “We think copper is making a bottom. I’d be willing to wager on $9,500/tonne before you go down to $7,500,” he said.
The Ivanhoe Mines (TSX: IVN) founder and co-chairman cited a recent report published by Goldman Sachs, which called for prices of $9,000/tonne this year as the global copper market is set to reach its tightest state since 2021.
“This year, the shutdown of Panama’s Cobre Panama mine along with lower grades in Chile has left the market prematurely tight,” the investment bank wrote.
Backing his bullish view on copper, Friedland pointed out that China consumed more copper in 2023 than any other year, signalling that demand remains strong in the world’s top consumer economy.
“Everybody talks about their weak real estate market, which is probably 20-25% of their economy, but there’s military demand, national security demand, and so physical offtake is very strong, and inventories are extremely low,” he said.
“So, really, this is like a power keg ready to explode as soon as the Fed cuts in the second half,” Friedland told Bloomberg.
And the growth, according to Friedland, is not just in China. “India, Europe and the rest of the world is all growing, and the demand for ESG and greening of the world economy remains very high.”
However, as he pointed out in a Bloomberg interview late last year, a copper price of $9,000 is far from enough to stimulate the industry: A price of $15,000 will be needed to actually spur new mines.
To reach that, the mining executive re-emphasizes the growing military demand as well as the energy transition as the main drivers of copper.
