With current copper prices at $3.45 per pound—and still rising—many have begun to question the sustainability of such a level.
Copper prices are up more than 180% since mid-2003, as new copper production is beginning to come on line. Yet even under such circumstances, is it realistic to believe that current copper prices can be maintained, and may even go higher.
Current Copper Prices
In the U.S., the nation’s first new copper mine in a decade is about to begin production in the desert valley near the Colorado border.
Elsewhere around the country two other copper mines and expansion of several existing mines are planned in Arizona, a state that produces 75% of the copper mined in the United States. An old copper mine in Nevada is also being reopened, and one in Utah is being enlarged. Montana, once ruled by "copper king" mining firms, may also get a couple of new copper mines.
This will continue until the supply/demand conundrum equalizes at some point in the future.
Driving this rebirth is record-high copper prices, caused by the booming economies of China and India, which need massive amounts of copper to support their burgeoning infrastructures.
China and India Consumption May Drive Current Copper Prices Much Higher
Currently, China isn’t consuming nearly as much copper and the Unied States. The U.S. consumes 50 pounds of copper per capita each year, while China is using only one pound of copper.
However, there’s little arguement over whether or not this number will grow. The only consideration is over by how much.
If consumption from China and India continues as expected, or goes higher, the pressure to keep up with this demand should keep copper prices strong for a long time to come, despite any new production that would be coming into the market.
Most of this new production is just beginning to replenish some older mines that have become exhausted or depleted anyway, let alone catching up to the new demand that has been added from Asia.
Bottom Line: I Think Current Copper Prices Are Heading Higher in the Near-Term
Without copper you simply can’t build modern society. Tubing, plumbing for houses, offices, wiring in cars and motors, just to name a few. Copper is one of the basic building blocks of our modern infrastructure. You can’t even light a light bulb without copper.
Copper prices will remain very strong in the near-term and will move possibly as high as $4.50 to $5.00 a pound during this time period. I don’t think this is as ridiculous as some may believe.
As always, it will be fun to see what happens.