High copper price refloats discussions about an eventual metal supercycle

Investment bank Goldman Sachs pointed out that there could be conditions similar to those that boosted commodities in the 2000s. Locally, there is caution.

The price of copper has extended its positive streak since 2020, closing its price on the London Metal Exchange yesterday at US $ 3.69 per pound, the highest value in almost eight years. The metal has been on the rise for several months and the projections are more than positive, which has sparked discussions about a new supercycle.

This, following estimates by investment bank Goldman Sachs, which argued that while last year’s strong rebound in the prices of many commodities could be seen as a V-shaped recovery, this would only be “the beginning of a bull market. much longer structural for commodities. ”

Said report assured that “looking at the 2020s, we believe that structural forces similar to those that drove raw materials in the 2000s could be at play,” even advancing values ​​above US $ 4.

The entity was based on the fact that this year, the copper market should face the strictest conditions in a decade, due to a deficit of 327 thousand tons, which would extend to 2022 with 153 thousand tons, to see a slight surplus in 2023 of 35 thousand tons.

Key to these projections is the performance of China, which has strongly increased consumption, even as a state reserve, which has impacted Western inventories. Added to this is the Asian giant’s five-year plan, which raised demand expectations for several key copper consuming sectors.

At the local level there is greater caution in this regard. The biminister of Energy and Mining, Juan Carlos Jobet, said that although the projection is that the mineral will remain above US $ 3 in the short and medium term, “Cochilco, which is our technical service in mining, says that” probably ‘ there is no supercycle, but there are differences among experts. Therefore, it is recommended to avoid the use of that word “.

For his part, the executive director of the consulting firm Plusmining, Juan Carlos Guajardo, said that “I believe that we are in the presence of a cycle of really high and prolonged prices, but I do not think it is of the same magnitude as the last super cycle. That period had characteristics that had not been seen, we would have to go back to the beginnings of the industrial revolution and that is what happened, that China had its own industrial revolution. Furthermore, these are different stages, there is learning, China will continue to grow, but not as significantly as in the 2000s. ”

Peru Factor

Regarding yesterday’s increase, Cochilco’s executive vice president, Marco Riveros, explained that it is mainly due “to the increased vulnerability of copper supply worldwide. The Las Bambas mine, in Peru, could stop copper production. Due to protests that have lasted for three weeks, with road blockades that have prevented exports of the metal. Las Bambas Mine produces, annually, about 400 thousand tons of copper and represents around 2% of world production. ”

New undersecretary of Mining

For just over four months, the Undersecretary of Mining, Iván Cheuquelaf, replaced Ricardo Irarrázabal at the end of August.

This, after yesterday in the middle of the cabinet change announced by President Piñera, Cheuquelaf left office, according to him, to run for a position in the next election for the Constitutional Convention.

In his position, the now former mayor of the Antofagasta Region Edgar Blanco, who had been in that position since October 2019, was nominated.

Blanco is an Industrial Civil Engineer with a major in Mining and a Master’s degree in Mineral Economics from the Pontificia Universidad Católica.

Source: El Mercurio