Riding the Copper Megatrend

Big miners BHP and Rio Tinto have had a tough year, but may be well placed for the next copper rally.

Copper, the ‘metal of electrification’ critical for transition technologies, continues to perplex markets.

Severe supply shortages are forecast as governments scramble to meet net zero targets. The red metal is up more than 50% over the past five years. But its vector has been erratic, testing investor nerves with each new downturn.

Copper surged through the first half of the year, soaring to a new high of more than $11,000 in May, prompting Goldman Sachs to forecast prices pushing $15,000 by the end of the year.

That rally faded as quickly as it sparked into life, with anticipated near-term demand falling away. The metal has plunged some 20% since its early summer high, priced at $8,970 per tonne at the time of writing, with Goldman’s latest outlook forecasting an average value of $10,100 next year. The slowdown coincided with the collapse of BHP’s (LON:BHP) $39bn bid for Anglo American (LON:AAL), which cast the market into further shadow.

Converging pressures have weighed on copper and other commodities, including the continued strength of the US dollar in which most commodities are priced, uncertainty regarding the fluctuating US presidential race, and uneven global economic growth.