Post by
LongTView on Jul 18, 2022 10:16am
Copper Price
I find this recent announcement - Goldman still sees copper reaching $15K/ton in 2025, citing a "clear structural bull story" as mine supply peaks, but the bank trims its price forecast to $7,600 in six months and $9,000 in 12 months, vs. previous forecasts of $10,500 and $12K, respectively".
On my recent post on July 10th, where I focused on demand, I noted that Hybrid, plug in hybrid and electic cars has the potential to add significan demand for copper in the next 6 to 12 months. My theory is based on how automotive sectors plan and execute.
They design, built and test models up to 3 years on advance, sometimes longer, tool up produciton lines for each model, and then start producing to a planned amount of each model - all based on market forecasts.
All of the raw materials are planned and ordered in advance. Once they turn on thee production lines, they cannot stop, as all the supply is already contracted and is arriving. Tires, mufflers, alternators, radiators, brake discs, steel stampings, seats, etc.
Today we see many EV's and Hybrids sold out. WIth the Ford Mustang sold out for 2 years in advance, The Porsche Taycan sold as prior to arriving at a dealers lot, and the Audi Q5, the only Audi Hybrid, so short is supply that customer have to wait months for a car, what do you suppose each marketing team is forcasting for each new electric or hybrid car? Especially since consumers today and buying everthing they can produce at list or above list prices?
And so my point is simple - each automotive company will be ramping up every plug in hybrid, hybrid or EV to the max of the market forcast, tooling production lines for this forecast and will start contracting for all the materials in the next 6 to 12 months.
Add to this industry bullishness, the USA auto manufactures say they are about 11 million cars behind demand over the past 2 years.
So, whule Goldman has a 12 month price forcast of 9,000 per ton, I am willing to bet that this comes a lot sooner then 12 months.
As I send in my earlier post - watch the auto sector - visit a dealer and hear what the salesmen are saying. Keep in mind, Russia's invasion of Ukraine plays a role as Europe is legislating the end of internal compustion engines to be less reliant on gasoline, and oil prices will influence the consumers buying decision.
This shift that I am seeing can easily be an additional 2% increase in global copper demand in the next 6 to 12 months.
Cheers