Has been very interesting of late. I usually do not put much 'stock' in inventories, seen that headfake too many times, but have been following it closely, and both inventories and price movement indicate supply issues. The CU price over the past weeks I saw as a consolidation pattern, with it dipping below 3.50 but just briefly during the day, indicating solid support at that price.
If there is sufficient supply, then it is still trading in its appropriate range, with normal buying and selling patterns.
Factors that will move the price into another range.
1/ Batteries. The battery tech varies, but none of them use much copper, and there are many materials that work well as a battery, so if price gets too high, then the other tech becomes more price competitive. There is competition in the materials on the battery tech. Not so with moving it from the battery to the drive system, or in making the drive system work.
2/ Copper is the only material at this point which is cheap in relative terms, and is a perfectly designed material for moving electricity. It lasts, does not break down over time, and has little loss in transmission. Copper has no competition to transport energy in an energy based world. The only issues are supply and demand.
3/ If there are supply issues in this scenario, then both suppliers and end users will begin to get "nervous" with that supply. Having cars sitting on the production line waiting for more copper to show up would not work out well for some. Same with wind turbines and all other things that make our little world wind up. Once we hit that point, if we do, or if there is the perception that it is near, then expect those supplies and end users to increase their end inventories as the price moves up. That in itself will drive the price higher, and create more supply issues, as hording at the manufacturing level for those perceptive enough to understand the dynamics, takes place.
4/ If others get involved in this, it could drive the price even further
5/ Short term trump card is 40k tonnes of CU showing up at the LME, pressure is off, price will drop.
I fully expect this scenario to play out, as it has in the past, not only with CU, but other commodities, the only question is when. Are we on the cusp now?
That this is occuring during a worldwide pandemic affecting trade and retail worldwide is beyond bizarre.
KW