Copper is unexpectedly getting cheaper

IN LATE June, Robert Friedland, the bombastic boss of Ivanhoe, a Canadian miner, warned that the world was running the risk of a “train wreck”, when a crunch in copper supply would derail the energy transition. The metal is used in everything from wiring to wind turbines – and green mandates in America, Asia and Europe will soon demand many more of these. The price of copper, Friedland suggested, could jump ten times in response.

Right now, however, the train is not so much derailed as chugging along happily. Having peaked at US$10,700 a tonne in March last year, copper prices at the London Metal Exchange have dropped by around 10 per cent since January to US$8,300 a tonne. Spot prices remain on par with or higher than those for delivery in three months, suggesting that investors do not expect them to bounce back soon. What is going on?

Because of its range of uses, which include construction, electronics and weaponry, copper prices indicate the health of the global economy, earning the metal the nickname “Dr Copper”. Worries about the economy may therefore be making investors gloomy about copper’s prospects. The post-Covid rebound in China, which consumes as much as 55 per cent of global supply, is already fading. Growth is also flagging in the West as rising interest rates bite.