Copper: long-term promise cannot overcome bearish tone

{"text":[[{"start":12.22,"text":"If physicians make the worst patients, Dr Copper is suffering. "},{"start":16.324,"text":"Said to offer a prognosis on the world’s economic health, copper’s price has dropped more than a third since early March. "},{"start":22.654,"text":"The red metal’s vital role in the impending energy transition seems to have lost its urgency. "},{"start":27.722,"text":"A good long-term prognosis does not prevent further falls in the short term. "}],[{"start":32.89,"text":"Copper’s long-term positives are legion. "},{"start":35.719,"text":"For one, supply dwindles each year as the percentage of copper in mined ores diminishes, raising costs. "},{"start":41.662,"text":"Economies shifting away from fossil fuels also require more copper. "},{"start":45.879000000000005,"text":"Wiring electric cars and buses — hybrid and full battery — will require 1.2mn tonnes of copper in 2025. "},{"start":53.359,"text":"That is more than double the amount needed last year, says the International Copper Association. "},{"start":58.427,"text":"World consumption is about 24mn tonnes. "}],[{"start":62.47,"text":"But the long term matters little to those losing money in copper miners now. "},{"start":66.849,"text":"London-listed Chilean copper miner Antofagasta trades on an enterprise value to ebitda multiple of just four times. "},{"start":74.029,"text":"That is at decade lows, never mind that the underlying commodity sits at only the midpoint of its own 10-year range. "}],[{"start":81.13,"text":"The price of copper has fallen near the long-term economic price of roughly $3 per pound, around which the traded value fluctuates. "},{"start":88.77199999999999,"text":"Six years ago, notes Tom Price at Liberum, analysts would have pointed to that price as providing an incentive to production. "},{"start":95.502,"text":"Back then, China’s economy also had slowed sharply and its property market looked in serious trouble. "},{"start":101.13199999999999,"text":"Copper touched $2 and rebounded. "},{"start":103.58699999999999,"text":"See that as a worst-case scenario. "}],[{"start":106.84,"text":"Even so, that suggests copper has further to fall this year. "},{"start":110.757,"text":"It may explain the growing net short positions of copper traders as reported by the US Commodity Futures Trading Commission. "},{"start":117.224,"text":"That net sell position has been larger in recent history, but not by much more. "},{"start":121.729,"text":"Keep monitoring the patient’s vital signs. "},{"start":124.409,"text":"Copper’s sell-off has not finished. "}],[{"start":126.54,"text":""}]],"url":"https://creatives.ftacademy.cn/album/77465-1657936431.mp3"}