Miningweb: Copper soars on supply chaos, not strong demand - Javier Blas

Key topics:Copper prices soar past $10,000 on major global mine disruptionsGrasberg accident halts 4% of world supply, recovery unlikely before 2027Weak Chinese demand limits prospects for a lasting copper bull market.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Javier Blas.In commodities, there are two kinds of bull markets: good ones, driven by strong demand, and terrible ones, powered by supply shocks. The former are typically more durable, requiring higher-for-longer prices to encourage investment in new supply; the latter often prove short-lived.The copper market has witnessed both kinds over the last 25 years, with prices rising to a record high of $11,104 per metric ton last year from $2,000 in 2000. Often, the factors were so intertwined that it was difficult to discern which was more important. Right now, however, it’s very clear: It’s a supply issue..Copper mines suffer so many accidents every year that analysts pencil in a “disruption allowance” in their annual supply forecasts. But even by its standards, the red metal has seen far more disruption than the market could have anticipated. Hence why the metal is currently changing hands at prices above $10,000. .Read more:.Miningweb: Congo moves to unlock copper, cobalt and lithium amid global demand.This year’s list of supply upsets is long. There was the flooding of the Kamoa-Kakula mine in the Democratic Republic of Congo in May, followed by an accident hitting the El Teniente mine in Chile in July. Earlier this month, social unrest disrupted the operations at the Constancia mine in Peru. But the worst came on Sept. 8, when hundreds of thousands of tons of mud rushed into underground tunnels of the Grasberg mine in Indonesia, killing several workers.Grasberg isn’t just any copper mine, but the world’s second largest, contributing about 4% of global production. For now, output has halted and is unlikely to return to its pre-accident level until 2027 at the earliest. In scale and duration, this is a very large shock, well beyond the annual disruption that analysts anticipate.Ultimately, copper prices will need to rise to re-balance the market. Can the red metal surge surpass its 2024 all-time high and hit, say, $12,000 a ton? Perhaps. The loss of Grasberg is large enough, particularly over the next six months, that higher prices may be needed to restrain demand. But don’t mistake the supply shock with the start of a multi-year bull market. Certainly, the most dazzling forecasts — commodity hedge fund manager Pierre Andurand says prices will jump to $40,000 before 2030 — look nonsensical to me.To extend its rally, the metal needs more than supply disruptions: It needs strong demand growth in China. The Asian giant purchases about half of the world’s copper consumption, and needs to consume more to sustain a bull market. But right now, China isn’t buying, or, at least not a lot. The country’s real-estate sector, a big consumer, is in the doldrums. Its export locomotive is also struggling amid the trade war with the US. China re-exports about 20% of the copper it buys in finished goods — electrical appliances, computers, mobile phones and the like..Understandably, Chinese traders aren’t rushing to buy. The premium manufacturing companies pay above benchmark prices to secure delivery of metal in Shanghai, a key barometer of the health of the Asian market, remains depressed at about $50 a ton, compared to a 2020-2025 average of $60.5 a ton.For sure, one can look beyond present Chinese demand weakness into a future when, by the rosiest estimates, refined copper consumption doubles to 50 million tons by 2035 from about 25 million now on the back of the energy transition. Copper is one of the best power conductors, and the electrification of everything — electric vehicles replacing internal combustion engines, or homes being warmed by heat pumps rather than gas — would require lots of metal. But that’s a future only featuring on stylized charts for 2030 and beyond, rather than the reality of 2025..Read more:.Miningweb: Glencore eyes sale of Congo copper mine as US moves on cobalt deals.Those willing to disregard the current demand weakness should also discount the ongoing supply disruptions. Because, sooner or later, those miners will re-start production.Take the Cobre Panama mine, which was shut down in November 2023 following a legal fight, removing about 1.5 % of the world’s supply. A new Panamanian government has indicated it’s ready to discuss its reopening, although with conditions. If — admittedly a rather big if — Cobre Panama resumes output next year, it could offset many other production glitches. On top, new projects would come into stream, with expected additions in 2026 from the Democratic Republic of Congo, Chile and Mongolia.Copper has many of the ingredients needed to become the most bullish market of the commodity industry. Current prices are already extremely elevated by historical standards, particularly when looking at annual averages rather than daily quotes. Year-to-date, the metal is averaging nearly $9,600 a ton, the highest ever annual average. But for a sustained bull run, focus on when demand growth accelerates, rather than hope that supply continues to disappoint..© 2025 Bloomberg L.P.

Miningweb: Copper soars on supply chaos, not strong demand - Javier Blas

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