Since this year, global copper prices have continued to rise. London copper continued to rise after breaking the 9,000 US dollars/ton mark. After reaching a high of 9164.5 US dollars, there was a slight fluctuation, hitting a new high since mid-April 2023.
In the Hong Kong and US stock market, copper-related concept stocks and ETFs also performed well. Of the Hong Kong stock market$ZIJIN MINING (02899.HK)$,$JIANGXI COPPER (00358.HK)$The increase this year was over 20%, in the US stock market$Southern Copper (SCCO.US)$Copper ETF with larger assets, up more than 25% during the year$Global X Copper Miners ETF (COPX.US)$It rose more than 13% during the year.
The Nvidia GTC conference not only sparked the AI chip market, but the copper cable products used in the chip were also hotly debated. According to Hwang In-hoon, GB200 uses NVLink technology with 72 Blackwell GPUs fully interconnected, and has over 2 miles of NVLink copper cables, demonstrating the huge potential of copper cable connections in the field of high-performance computing.
According to reports, Nvidia's move was to reduce the electricity consumption of its data center equipment, but its large-scale copper usage also exceeded market expectations, and it is also known as a “copper devour.” Damo believes that with the rapid development of AI technology, copper demand will increase significantly, and AI data centers will become a new growth point for copper demand. By the fourth quarter of 2024, the price of copper may rise to 10,500 US dollars/ton, which is 18% higher than the current level.
According to the bank's analysis, AI data center demand for copper may account for 3.3% of global copper demand (in comparison, electric vehicles may account for only 5.2%), which will drive up copper prices and have a profound impact on the global copper market.
Coincidentally, analysts at Komo also said in a recently released report that Nvidia is shifting short-distance data transmission from artificial intelligence data centers to copper cables, which marks a sharp increase in future copper demand and is expected to boost the stock prices of relevant copper stocks.
Evercore ISI analysts attributed Nvidia's move from optics to copper to “liquid cooling,” as this key factor “allows more GPUs (graphics processing units) to fit into a single rack.”
According to reports, although optical fiber cables have taken a place in data transmission, copper still dominates power distribution and heat exchangers. The advantages of copper are lower installation costs, less electricity consumption, and the thermal design does not require much cooling.
From the supply-side perspective, overseas mine-side disruptions have continued to occur since the end of 2023. Some well-known mining companies, such as Anglo-American Resources Group, have lowered their copper production targets, which indicates a decline in future copper production, which will affect the supply situation in the market. Furthermore, the peak growth rate of copper ore supply may have appeared ahead of schedule, and the growth rate of copper concentrate production will tend to decline in the future, which further exacerbates the tight supply situation.
From the demand side, since copper is widely used in data transmission, electronics, electricity, construction, transportation, etc., the rapid development of AI technology, new energy and other related industries will have a positive impact on copper demand. Furthermore, copper consumption is expected to continue to grow as the global economy recovers.
Institutions such as Goldman Sachs and Citibank are optimistic about the subsequent trend in the copper market, and it is expected that copper prices will reach new highs. The bank said that insufficient structural supply can no longer meet demand, and copper prices will surely rise sharply to achieve self-regulation of demand. The contraction in supply and demand is expected to continue until 2025. Copper prices are expected to hit 10,000 US dollars/ton by the end of this year, and may exceed 12,000 US dollars/ton in 2025. S&P Global predicts that copper prices are expected to hit a high of 13,000 US dollars per ton this year, and Citibank is also optimistic about copper price performance.
Some copper stocks are introduced as follows:
It is the only company in China that has surpassed the one million ton mineral copper production mark, and the ranking among global copper mining companies has also improved well, ranking among the top five in the world. In 2023, Zijin Mining produced 1.01 million tons of copper, up 11% year on year; mineral gold was 67.7 tons, up 20% year on year; mineral zinc (lead) was 467,000 tons, up 3% year on year; mineral silver was 412 tons, up 4% year on year.
Jiangxi Copper Co., Ltd. owns the Dexing Copper Mine, the largest open pit copper mine in China. In addition to the Dexing copper mine, there are also four wholly-owned mines: Yongping Copper Mine, Chengmenshan Copper Mine, Wushan Copper Mine, and Yinshan Copper Mine. The total copper resource reserves of the company's five major mines are 7.3 million tons. The average remaining can be mined for 37 years. The company's five major mines account for about 21% of the country's copper reserves.
With a market capitalization of US$67.4 billion, McMoRan Copper and Gold Company is one of the world's largest producers of copper and ore. Revenue reached $22.9 billion in 2023, and profit margin was 8.1%. Notably, the company predicts revenue to grow at a rate of 4.4% per year over the next three years, while revenue growth for the entire metals and mining industry is 4.1%.
Southern Copper has a total market value of US$82.3 billion. It operates mainly in South America and Central America. It ranks among the highest in global copper production, producing 911,000 tons of copper in 2023. The company has performed well in the US stock market recently, and its stock price has repeatedly reached new highs. Investment bank Jefferies recently gave the stock a buy rating. The target price is $130, and there is still 22% room to rise from the current stock price. The bank anticipates that the copper market will enter a supply shortage, and inventories will fall and prices rise faster than expected.
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