Copper hit US$10,008 a tonne on the London Metal Exchange today, nearing the record inter-day high of US$10,204 per tonne set in February 2011.
“It’s a great time to be a copper miner and prices are way, way above what it costs to get the metal out of the ground,” Robert Edwards, principal analyst at the CRU Group, told The Northern Miner in a telephone call from London. “For every one dollar they spend getting the metal out of the ground, they earn at least two dollars.”
Edwards said he thinks there is some runway for the metal to increase in price, but also expects a correction.
“In the short term we see the price going higher but we do think there will be a correction during the second half of this year.”
Colin Hamilton of BMO Capital Markets noted that breaching the $10,000 per tonne threshold “for the first time in over a decade and only the second time in history” underscores “the strength of demand recovery that we have seen across the global market, built on solid end-user expectations but also augmented by financial market support on the back of economic growth upgrades and stimulus expectations.”
But the mining analyst also warned that “$10,000 per tonne copper now is the biggest danger to future demand use, particularly in these nascent trends where material selection is still evolving.”
“There is no doubt copper may be best for electrical or heat transfer performance, but with the ratio to aluminium now well above the 3.5:1 level where we consider substitution accelerates, the risk is clear.”
In a recent report on copper, Goldman Sachs forecast a copper price of US$15,000 per tonne (US$6.80 per lb.) by 2025.
The investment bank expects the metal will average US$9,675 per tonne this year; US$11,875 per tonne in 2022; US$12,000 per tonne in 2023; and US$14,000 per tonne in 2024.