Pay close attention to copper stocks.
With copper prices just beginning to pop on supply-demand issues, stocks like Freeport McMoRan (FCX), Southern Copper (SCCO), BHP Group (BHP), and Riot Tinto (RIO) could move aggressively higher. You may also want to keep an eye on the Global X Copper Miners ETF (COPX), which ran from a January 2020 low of $30 to $40.30 so far.
From here, if it can break above triple top resistance, we could see a near-term test of $45.
The supply-demand situation has grown so dire, one of the world’s biggest copper traders, Trafigura Group believes the metal could hit $15,000 a ton over the next decade.
Goldman Sachs – which called copper ‘the new oil’ – also says copper could rally to $15,000 by 2025, as the world transitions to cleaner energy. The firm also believes annual demand for copper could skyrocket 900% to 8.7 million tons by 2030.
After all, “Copper will be crucial in achieving decarbonization and replacing oil with renewable energy sources, and right now, the market is facing a supply crunch that could boost the price by more than 60% in four year,” reports Business Insider. Electric vehicles, for example, use four times as much copper as petroleum-based cars.
Problem is — the world hasn’t seen newer investments in copper mines, which means users are competing for scarce supply.
“2021 is shaping up to be a year of significant deficit in the copper market as tighter-than-expected supply struggles to keep up with a radically improved demand outlook, underpinned by unprecedented levels of ‘green’ stimulus,” reports Mining Review.
“We expect copper demand growth outside of China to be a key driving force this year. The global industrial recovery is picking up pace, with macro indicators across several key copper consuming nations showing strength. Recent manufacturing PMI readings in the US, Europe, Japan, South Korea and India have entered expansionary territory.”
From here, copper prices and stocks could trend even higher.
With promises of a greener future, and a pledge to reduce emissions, the world will need as much copper as it can possibly get. Right now, supply just cannot keep up with demand.