Is it too late to buy surging ASX copper shares like Sandfire?

ASX copper shares have rocketed in 2024 amid a surging copper price. What can investors expect now?

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ASX copper shares have been lighting up the boards this year amid the red metal's bull run towards new record highs.

With demand growth outpacing supply growth, the copper price has surged from US$8,197 per tonne on 15 February to US$10,030 per tonne today.

As you'd expect, that's offered some heady tailwinds for miners with a strong copper focus.

The Aeris Resources Ltd (ASX: AIS) share price, for example, has rocketed 189% since 15 February.

And S&P/ASX 200 Index (ASX: XJO) copper share Sandfire Resources Ltd (ASX: SFR) is up 39% over that same period. This is a company with a market cap of almost $4.5 billion.

The booming global demand for copper also saw now dual-listed, Canadian-based Capstone Copper Corp (ASX: CSC) begin trading on the ASX on 8 April. Since then, the ASX copper share has gained 12%.

Then there's BHP Group Ltd (ASX: BHP).

While iron ore brings in the biggest slice of BHP's revenue, copper comes in at number two. And BHP is actively looking to increase its copper exposure, lobbing a roughly $60 billion takeover bid for copper-focused Anglo American (LSE: AAL) last month.

That offer was rejected by Anglo American's board. The market is now waiting to see if BHP comes back with a better offer.

Why ASX copper shares are enjoying near-record prices

Looming interest rate cuts from the US Federal Reserve, supply disruptions at various mines across the world, and strong demand growth have all worked to send the copper price — and ASX copper shares — skywards.

These dynamics have seen Goldman Sachs boost its year-end price target for copper to US$12,000 per tonne, up from the prior forecast of US$10,000 per tonne.

According to Goldman analyst Nicholas Snowdon (quoted by Bloomberg), "We continue to forecast a shift into open-ended and mounting metal deficits from 2024 onwards."

Snowdon noted the possibility that global inventories could dip to very low levels in the fourth quarter of 2024.

AIs, EVs, and the great energy transition

In late April, Nick Pashias, head of Equities and portfolio manager of Antares' High Growth Shares Fund, highlighted the range of factors driving rising global copper demand and, in turn, supporting ASX copper shares.

According to Pashias:

In an era where the world is increasingly reliant on electricity, copper emerges as a critical component in meeting the surging demand.

As the backbone of power infrastructure and a key enabler of technological advancements such as EVs, AI, and data centres, copper stands at the forefront of the energy revolution.

Highly conductive copper has benefited from the rapid increase in electricity consumption.

Addressing this unprecedented surge in electricity use, Pashias said:

Data centres, fuelled by the AI boom, have become the fastest-growing consumers of power. As AI applications continue to evolve, the demand for data processing and storage escalates, placing significant strain on power grids worldwide.

With data centres increasingly adopting AI technologies, the need for robust power infrastructure, including copper-based systems, becomes indispensable.

He noted that data centres currently consumed around 1% to 2% of total electricity production, with median forecasts suggesting "data centre energy usage will grow at 11%" every year through 2030.

And this booming demand growth comes amid limited new supplies.

"Factors such as geopolitics, production halts, delays, and aging mines contribute to a tightening supply-demand imbalance, amplifying the attractiveness of copper as an investment opportunity," Pashias said.

So, is it too late to buy ASX copper shares like Sandfire Resources?

Putting the pieces together, I think not.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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 Scott Phillips.

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