Silver Storm Mining Ltd. (TSXV:SVRS)
Building the Next Latin American Silver Producer.
Since early February, copper, known as an economic indicator and a leader in the industrial metal sector, has seen a continuous price surge. On Thursday, April 4th, during trading hours, the London Metal Exchange (LME) three-month copper futures contract price rose by 1.5%, reaching a 14-month high. Some institutions even anticipate the year-end copper price to rise to $10,000 per ton.
There are two main rationales for being bullish on copper. Firstly, copper prices are influenced by the macroeconomic environment, with its production and consumption closely linked to overall economic performance, earning it the moniker “Dr. Copper”. Recently, manufacturing data from the world’s two major economies, China and the U.S., has shown signs of economic recovery, which is fueling the rise in copper prices. The second rationale lies in the economic electrification and transition to green energy, a global trend unlikely to undergo significant changes, thus providing long-term support for the increase in copper prices.
While the above discussion focuses on demand, there have been frequent updates on the supply side as well. Recent reports suggest that smelters from China are contemplating joint production cuts. Statistical data reveals that refined copper production from China accounts for over half of the global output. As for copper mining, the steady decline in copper ore grades and the lack of new discoveries are undeniable facts. Kevin Murphy, a metals and mining analyst at S&P Global Market Intelligence, highlights that between 1990 and 2019, a total of 224 copper deposits were discovered, whereas in the past decade, only 16 deposits were found, leading to the emergence of the concept of “peak copper”.
Goldman Sachs analysts indicate in a research report that there will be a supply shortfall of 250,000 tons in the second quarter of this year, and a 450,000-ton deficit in the second half of 2024.
As early as September of last year, Eduardo Covarrubias, Chairman of the mining development company Los Andes Copper Ltd. (TSXV: LA, OTCQX: LSANF) , expressed in an interview with “Metals 100” that regardless of recent fluctuations in the copper market, there will be structural shortages in the market over the next 7-8 years due to the inability of copper supply to keep up with the demand generated by electrification, making large greenfield projects particularly important. Los Andes Copper’s Vizcachitas project will become Chile’s next large copper mine.
In summary, robust demand and tight supply dynamics create a market environment conducive to the rise in copper prices. If you are optimistic about global economic growth, electric vehicles, and green energy, there is no reason not to be bullish on copper.
Furthermore, the increase in copper prices is part of a broader context. With the Federal Reserve initiating an interest rate cut cycle and ongoing supply tightness, the market is echoing the slogan of a “commodity bull market”: spot gold repeatedly hitting new highs, surpassing $2238 per ounce; crude oil gradually recovering, with U.S. oil breaking through $80 for the first time in nearly four months.
