By BUUMBA CHIMBULU
EXPERTS have predicted that commodities prices may stay high for decades as mining companies struggle to keep up with demand from the energy transition.
Yesterday, copper prices in China hit a more than two-month high supported by concerns of supply tightness amid persistent low inventories.
The most-traded February copper contract on the Shanghai Futures Exchange was up 1.5 percent at US$11,256.07 a tonne, the highest since October 2021.
Three-month copper on the London Metal Exchange was down 1.1 percent at US$9,949.5 a tonne, but held closer to US$10,072, its highest level since October 2021, hit in the previous session.
On Wednesday, the copper price rose as worries eased about economic growth in top metals consumer China and positive sentiment swept the commodity sector.
March delivery contracts were exchanging hands for US$10,140 a tonne on the Comex market in New York in midday trade, up 3.5 percent compared to Tuesday’s closing and the highest since October.
That trend is unlikely to change anytime soon, according to BlackRock’s global head of thematic and sector-based investing Evy Hambro.
Mr Hambro according to Mining. Com predicted that commodities prices may stay high for decades as mining companies struggled to keep up with demand from the energy transition.
“We have got decades worth of high rates of investment into infrastructure as the world seeks to decarbonize. That is a widely held consensual view.
“What we are likely to see is strong demand that will keep prices at very, very good levels for the producers for many years into the future, and that could be decades,” he said.
Goldman Sachs Group last week said that a commodities super cycle has the potential to last for a decade, adding that while infrastructure spending will require large amounts of materials like steel and cement, the green revolution will also need more metals including cobalt and nickel for products like batteries.
And Barrick Gold Chief Executive Officer, Mark Bristow said on a panel in Saudi Arabia that copper was such a strategic metal indicating that the red metal without a doubt faced supply challenges in the coming years.
Mr Bristow said: “There is been too little investment in the red metal and that’s already a problem for the sector as consumption rises. We are in for a long solid market demand for metals.”
Meanwhile, Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen said: “The focus in China is moving away from worries about the property sector slowdown to increased signs that they are going to provide stimulus and support to the economy, some of which will benefit industrial metals.”