The Zhitong Finance App learned that hedge fund manager Pierre Andurand expects copper prices to rise nearly four times over the next few years to reach 40,000 US dollars per ton due to insufficient global copper inventories due to soaring demand.

Andurand's confidence in the copper market helped his $1.3 billion Commodities Discretionary Enhanced fund to rebound from a 55% loss last year, when his bullish bet on oil was highly skewed. According to people familiar with the matter, the fund has accumulated an increase of 83% this year, with earnings from various commodities. Despite losses last year, the fund has had an annualized net return of 34% since its inception in June 2019.

As the core metal of the energy transition, the price of copper has risen nearly 20% this year and hit a record high of $11,000 per ton last week. However, Andurand, one of the world's most well-known commodity traders, believes that this round of gains will continue for a long time due to supply difficulties in meeting demand.

“Due to global electrification, including electric vehicles, solar panels, wind farms, and military uses and data centers, we are doubling the demand for copper,” he said in an interview.

“I think they could end up reaching $40,000 per ton over the next four years or so. I'm not saying it'll stay the same until then; eventually we'll get a response from the supply side, but that will take over five years.”

Mining company BHP Billiton (BHP.US)'s bid against rival Anglo-American Resources Group is also seen as a sign that establishing new supply is more difficult and more expensive than buying a competitor that owns copper mines.

The former Goldman Sachs trader and BlueGold Capital co-founder believes that digging deeper and faster in existing mines isn't enough to keep up with the growing demand for copper. Industry insiders estimate that it usually takes 15 years to develop a new mine.

Andurand, famous for betting on oil and once known as the “god of crude oil trading” in the industry, also said that he learned lessons from the prediction that oil prices would rise to $140 per barrel. Despite conflicts between Russia, Ukraine, and the Middle East, this prediction did not come true.

“I think oil traders have learned to be wary of potential supply disruptions,” Andurand said. “I think we all lost a lot of money, and the expected supply disruptions didn't happen. You remember that pain.”

He now believes that crude oil prices will not rise sharply again.

“Geopolitical risks such as Russia and Gaza have not had an impact on supply, so I think this is the reason oil prices are relatively stable. I expect oil prices to remain stable and not fluctuate greatly,” he explained.

Andurand is also optimistic about other commodities, including cocoa and aluminum. The price of cocoa has tripled from the beginning of this year to mid-April. He believes the price of aluminum will continue to rise for reasons similar to copper because it can replace copper.