Prospects for copper, iron ore, lithium – buy copper on dip
Molten copper flows into a mold at a Wuzhou Jinsheng Copper smelting plant on January 19, 2022 in Wuzhou, Guangxi Zhuang Autonomous Region of China.
Hey Huawei | China Visual Group | Getty Images
Investors should buy copper on a dip when the opportunity arises, according to Jonathan Barratt, CEO of weather insurer CelsiusPro.
“Our outlook for 2023 and 2024 is: when you get a drop in copper prices, it’s something to have in your portfolio,” Barratt told CNBC, citing ample supply and high demand. copper in the renewable space.
Copper is a key component of electricity-related technologies, and by extension, a key link in energy transition projects.
“There’s just not enough supply. And when we look at everything that’s happening in the environmental field, the renewables, everything, copper is a major part.
The world is currently experiencing a global copper shortage, driven by higher demand pressures and challenging supply flows in South America.
According to the International Energy Agency, sales of electric cars in 2021 more than doubled to bring the total number of EVs worldwide to around 16.5 million. That means the EV charging ecosystem needs to grow.
Copper futures last traded at $4.14 a pound, up about 8.34% last year.
Iron ore prices are expected to fall
As for iron ore, Barratt expects the metal to be ready to trade at $115 to $110 per ton, which is about 9% lower than they are now, citing a regulatory crackdown in China.
The benchmark iron ore grade 62% last traded at $126.80 a tonne.
“I think the main moment we are focusing on is what the Chinese regulatory authorities are doing at the ports in terms of price regulation … and because they really don’t want to see too much [iron ore] Barratt said that could drop from 160 million tonnes of iron ore material down to 120 million tonnes.
In recent response to rising iron ore prices in China, the National Development and Reform Commission (NDRC) said that regulations and crackdown on illegal activities will be implemented to strengthen iron ore market price management.
“As a result, we’re going to see a big drop back in that inventory building in the Chinese ports … that’s going to put a flavor of less demand into the equation, Barratt said.
Workers tend to steel furnaces at the ArcelorMittal metals plant in Kryvyi Rih, Ukraine, on Wednesday, March 6, 2019.
Vincent Mundy | Bloomberg | Getty Images
Falling prices for global crude steel production could also contribute to lower iron ore prices.
“Steel production is the main driver of demand for iron ore and coking coal,” said Vivek Dhar, director of the Commonwealth Bank of Australia’s Mining and Energy Commodities Research team, in a daily note.
“Global crude steel output fell marginally in year-on-year terms last month … The output was driven by a drop in steel output among most of the largest steel producers in the world.”
Global crude steel output fell 3.3% in January compared to the same period last year, according to the World Steel Association.