Jeff Currie Calls Copper the Best Trade in 30 Years Amid $15,000 Price Surge

Key Takeaway

• Jeff Currie of Carlyle Group calls copper the "most compelling trade" in his 30-year career, driven by strong demand and slow supply growth.
• Copper prices have surged past $10,000 per ton due to factors like redistribution policies, environmental initiatives, and increased defense spending.
• Major players like BHP are focusing on M&A for growth rather than new mining projects, indicating further price increases before substantial greenfield investments occur.

Copper's Resurgence

Copper, long heralded as a key beneficiary of the global electrification drive, is experiencing a significant resurgence. Despite the metal's price decline over the past few years, it is now surging towards new record highs. High-grade copper recently traded over $500 per pound, reflecting a steep backwardation in the futures curve and a surge in open interest. This price movement underscores a renewed bullish sentiment among investors, driven by the long-term demand for copper in electric vehicles (EVs) and new grid infrastructure. Jeff Currie, Chief Strategy Officer of Energy Pathways at Carlyle Group, describes copper as his "highest-conviction trade ever," citing unprecedented demand growth from green capital expenditures, artificial intelligence, and military needs against a backdrop of constrained supply growth.

Supply Constraints and M&A Activity

The supply side of the copper market remains tight, with new mining capacity taking years to come online. Currie highlights that companies are increasingly turning to mergers and acquisitions (M&A) to boost production rather than investing in new greenfield projects. For instance, BHP's interest in acquiring Anglo-American reflects this trend. Currie notes that prices need to reach and sustain levels above $9,000 to $10,000 per ton to instill confidence in investors for substantial greenfield investments. He predicts that copper prices could soar to $15,000 per ton within the next 12 to 18 months, driven by the current tightness in copper concentrates and the eventual impact on end-use consumers.

Demand Dynamics and Environmental Policies

The demand for copper is bolstered by several structural factors. Redistribution policies, environmental initiatives, and deglobalization efforts are all contributing to increased consumption. Currie points out that green capital expenditures, such as those driven by the Inflation Reduction Act (IRA) and REPowerEU, are significantly boosting copper demand. Additionally, China's green CapEx growth, which was over 100% last year and 30% this year, is a major factor in the recent price rally. However, the market has also faced headwinds from regulatory easing and a strong US dollar, which have temporarily suppressed prices. Currie emphasizes that the long-term demand story for copper remains robust, with the metal playing a crucial role in the energy transition and technological advancements.

Street Views

• Jeff Currie, Carlyle Group (Bullish on Copper):

  "Long copper represents the most compelling trade I have ever seen in my 30-plus years of doing this."

• Jeff Currie, Carlyle Group (Bullish on Copper):

  "You look at the low unemployment rate, who’s the biggest benefactor of that? It is the lower-income groups, and policies still very much in play all over the world right now reinforcing these lower-income groups in the consumption of commodities."

• Jeff Currie, Carlyle Group (Bullish on Copper):

  "Everywhere you look in the world, we see environmental policy through green CapEx stimulating demand for commodities."

• Jeff Currie, Carlyle Group (Bullish on Copper):

  "Look at what’s going on in places like Germany, $100 billion dollars of military spend. So you’ve got all three [redistribution policies, environment policy and deglobalization] going much stronger than what we would’ve thought two-to-three years ago."