ASX copper miners will be in the spotlight this morning after the price of the red metal hit a new record high on the weekend.
COMEX copper futures in New York jumped 3.2% to US$4.75 a pound, reported The Wall Street Journal.
That’s above the last peak of US$4.63 per pound during the last commodity super-cycle in early 2011.
Copper poised to break new record highs again
The copper price also broke records on the London Metal Exchange. The price for the commodity for delivery in three months hit US$10,417 a tonne – or US$257 above its previous all-time high set in February 2011.
What’s more, several commodity forecasters believe copper could be heading higher over the next few months.
ASX miners riding on record copper prices
Mining giants like the Rio Tinto Limited (ASX: RIO) share price and BHP Group Ltd (ASX: BHP) share price will also benefit. But copper makes up only a small fraction of their group profits, so they aren’t seen to be the best way to gain exposure to the surging copper price.
What’s driving the copper super-cycle
Among the metals, copper is uniquely placed on the current boom, in my view. This is because the metal is benefiting from both economic growth and the renewable energy transition.
The global economic rebound from massive government stimulus will lift industrial production and construction, which drives copper demand.
Even as countries like India struggle to contain the resurgence of COVID-19, investors are confident that this will not derail the sharp economic rebound around the world.
On the other side of the demand equation, the rise of electric vehicles, solar and wind power are creating a second tailwind.
Copper price forecasts for 2021
There are other metals that are also leveraged to both these thematic, such as nickel. But no other base metals have the same reach as copper. This is why copper is affectionately referred to as “Dr Copper” by the market as it’s a bellwether for the group.
Meanwhile, there may not be enough of the good Doctor to go around. This prompted London-based hedge fund Commodities World Capital LLP to predict that the metal will climb to between $11,500 and $12,000 a tonne in the coming months, reported the WSJ.
Miners have been underinvesting in finding and developing new copper projects, which take years to bring to production.
But this doesn’t mean the rally will be smooth. Markets almost never go up in straight lines. Nonetheless, buoyant copper prices could be with us for some years yet.