As you may or may not know, copper is one of the biggest sectors of the mining industry and commodities markets. From recent news, President Biden is affecting commodity markets through his new plan. For example, In Biden’s $2.25 trillion infrastructure proposal $115 billion is being allocated for roads and bridges, and another $16 billion is being put towards oilfield laborers.
But where does this leave copper in the equation? Well in addition to copper being used in construction, there is another and much larger force moving the price of copper. And that is, simple supply and demand. There is projected to be a major copper shortage which could reach up to a gap of 10 million tons of copper in the next decade. So, what does this mean? Well for one it means that if there’s less copper available and at the same time there is more use for copper through Biden’s plan and in turn more demand, the price of copper will rise significantly.
According to Goldman Sachs, “the market is on the cusp of the tightest phase in what we expect to be the largest deficit in a decade”. The root of this shortage stems from overseas, where some of the biggest suppliers in the world of copper like Peru are being bogged down by the COVID pandemic and facing difficulties for production. Moreover, with lots of the exported copper going towards China instead of the US, Biden may have to turn to countries like Mexico for the supply. What do you think about the Copper Industry? And will you be investing?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.