By BUUMBA CHIMBULU
A 120 year chart has shown that copper price super cycle is only starting with Zambia and the Democratic Republic of Congo (DRC) not being far behind.
While hedge funds have gone soft on copper, the metal continues to trade within striking distance of all-time highs, according to Neal Brewster, chief economist at the fast-growing metals and chemicals research firm headquartered in London.
Copper is currently trading above US$10,141 per tonne, while the most-traded July copper contract on the Shanghai Futures Exchange fell 1.4 percent to US$11,426.29 a tonne.
At a virtual copper summit recently, Mr Brewster presented a graph that puts copper’s current rally in perspective, a 120-year long perspective.
The chart not only showed some correlation between copper and oil prices and with its broader inflation, but also with nationalisation and privatisation trends for natural resource assets through the decades.
Commenting on the chart, Mining. Com stated that it bears’ most convincing argument that the copper market was already too frothy, was a slowdown in China.
It explained that this was happening as Beijing withdrew post-pandemic stimulus and steers its economy away from breakneck fixed investment-led growth in copper intensive sectors like the electrical grid, housing and transport.
“The Democratic Republic of Congo (DRC) has gone from 96,000 tonnes in 2007 to 1.3 million tonnes last year, and thanks to Ivanhoe and Zijin’s Kamoa-Kakula and Greenfields like Deziwa, will soon overtake China as the no. 3 producer (that is if you don’t consider the DRC a de-facto mining province of China).
“Inspired by Indonesia’s success with raw nickel bans, the central African nation reinstated its concentrate export waiver system, creating another choke point in an already tight global supply chain. Zambia cannot be far behind,” it indicated.
Amidst this development, copper prices dipped on Wednesday last week, hit by signs of weakening demand in top consumer China, while a firmer dollar made greenback-priced metals more expensive to holders of other currencies.
According to Mining. Com, copper for delivery in July was down one percent to US$10,153 per tonne on Wednesday afternoon on the Comex market in New York.
“Yangshan copper premium fell to US$30.50 a tonne, its lowest since February 2016, indicating weakening demand for imported metal into China as high copper prices deter downstream consumption,” it stated.