JPMorgan forecasts commodities supercycle. Will ASX copper shares reap the benefits?

JPMorgan analysts foresee a years’ long supercycle for commodities. Will ASX copper shares reap the benefits?

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If JPMorgan’s analysts are right, the world is looking at a rare new supercycle in commodity prices. Prices have been on the rise for oil, metals and agriculture. And sustained high prices could last for years.

Over the past 100 years, there have been only 4 commodity supercycles. The last one started in 1996 and began to retreat during the fallout from the GFC in 2008.

Much of the credit for driving the last commodities supercycle went to a rapidly expanding, resource-hungry China at the time. But not this one.

As Bloomberg reports:

JP Morgan attributed the latest cycle to several drivers including a post-pandemic recovery, “ultra-loose” monetary and fiscal policies, a weak US dollar, stronger inflation and more aggressive environmental policies around the world.

According to the JPMorgan analysts, led by Marko Kolanovic, the world’s efforts to limit climate change could have “unintended consequences”. Consequences that could “constrain oil supplies while boosting demand for metals needed to build renewable energy infrastructure, batteries and electric vehicles”.

One of the metals you’ll find used extensively in electric vehicles and home storage batteries is copper. Copper is also widely used in electrical wiring for building construction, as well as plumbing. And with developed nations around the globe pledging big infrastructure spending, the metal could see further lifts in demand.

Two leading ASX copper shares

On 23 March last year, copper prices fell to US$210 per pound, victim to the wider COVID-driven panic selling at the time, and the lowest prices since October 2016.

Since then, copper prices have leapt 80%, currently trading at US$377 per pound. That’s right at an 8-year high.

While not every ASX listed copper share has ridden the wave higher, several have. Those include OZ Minerals Limited (ASX: OZL) and Aeris Resources Ltd (ASX: AIS).

The OZ Minerals’ share price is up 221% since copper prices bottomed on 23 March. Over that same period, the Aeris Resources share price gained 350%.

Year-to-date OZ Minerals shares are flat while Aeris Resources shares are down 18%.

Now there are no guarantees ASX copper miners will see their share prices go up, even if we’re in the early stages of commodities supercycle that will continue to lift copper prices in the years ahead.

But without a doubt, ASX copper shares will welcome higher copper prices.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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