The Copper Collective: Our Favorite Articles and Topics from May 2024

The temperature wasn’t the only thing rising in May, as investors and industry experts saw copper prices break through the $5 per pound threshold.

Prices have cooled off somewhat over the past two weeks but are still considerably higher than a year ago. If it seems like the market is unpredictable right now, you’re not the only one thinking about it!

So, what gives?

Let’s Take a Trip Back to 56 Years Ago…

In 1968, copper peaked at $0.72. That year also introduced one of the most well-known fast-food delicacies to American mouths – the McDonald’s Big Mac.

The brownish metal is up 35% in 2024, with most gains coming in the last few weeks. Jeff Currie, Chief Strategy Officer at Carlyle Group, called copper the new oil, and his reading of the energy pathways now sees copper going to $15,000 ($6.80 a pound).

But Richard Adkerson, Freeport-McMoRan CEO, said in a CNBC interview, “We’re on a trend to have a very serious shortage of the metal, and it’s driven by supply challenges.”

At the same time, there are concerns about how much electricity data centers around the globe are consuming. The International Energy Agency recently released a report saying global data center electricity usage could double by 2026.

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Around the Industry

• Consumers and businesses alike are taking their carbon footprints more seriously. As a result, ocean carriers have found themselves under increasing pressure to reduce carbon emissions. Ocean shipping produces about 3% of global greenhouse emissions and could rise as more products and materials move. To curb emissions, the industry is exploring alternative fuels, including hydrogen, ammonia, and biofuels.
  
• DHL Group announced a key leadership transition in DHL Supply Chain North America. Patrick Kelleher will serve as North America CEO for the organization, effective July 1.

• Disruption stretched into a second week at the ports of Los Angeles and Long Beach, as labor talks covering 22,000 dockworkers approach the one-year mark without resolution. The fear of potential problems has forced major retailers like Walmart to divert shipments to East Coast ports. Potential stoppages have also brought about action from the National Retail Federation, which urged President Joe Biden to step in and move negotiations along.

• Global copper demand will surpass supply by 20% – 30% in 2030, depending on how aggressively renewable energy is adopted, according to BCG’s analysis. 
   
• Global use of refined copper rose from 10 million metric tons in the late 1980s to 26.5 million tons in 2023, as Asia became the largest consumer with a 70% share of consumption. 
   
• Alaska Energy Metals has obtained an option to acquire the Bambino Nickel-Copper Property and has begun exploration programs on its properties in Quebec. 
   
• The Peruvian government is confident in its 2024 copper production goal of 3 million metric tons (MMT) after producing 2.76 MMT of copper last year. Mining is a critical part of Peru’s economy.

Shipping and Logistics🚢📦

The Jacksonville Port Authority processed 110,576 total TEUs in March, down about 4% from 2023’s total. This year’s total is also about 6% off its March 2019 volume.

Loaded imports at the Jacksonville Port were down 2% year-over-year and loaded exports were down 13% during the same timeframe. Empty containers processed increased 7%.

Trucking Capacity

According to U.S. Bank Freight Payment Index, spending by shippers dipped by almost 28% from Q1 of 2023, and roughly 17% from the closing quarter of last year. Shipments were down more than 21% year-over-year for the quarter.

Packaging and Pulverizing

U.S. parcel revenue fell 0.03% from $198.4 billion in 2022 to $197.9 billion in 2023 despite a slight parcel volume increase, according to data covering the nation’s four largest carriers, including USPS, Amazon, UPS, and FedEx.

Pitney Bowes forecasts that U.S. parcel volume will reach 23-35 billion by 2029.

Panama Canal Eyes Rainy Season to Turn Transit Tide

For more than 100 years, the Panama Canal has been the fastest and easiest route for cargo ships to move between the Atlantic and Pacific oceans.

Though annual transits have sat around 14,000 since the mid-1990s, a 2016 expansion project dramatically increased the tonnage moving through the canal. 

Although the Panama Canal is pivotal to international trade, it’s also dealing with a problem decades in the making.

The Thermoplastics Report

PVC (Polyvinyl Chloride) – Buying activity in the PVC market has shown signs of restraint in the Asian and U.S. markets due to a sluggish recovery in downstream demand, particularly in China’s real estate sector.

PE (Polyethylene) – Activity increased in the PE marketplace, but the uptick in trading and demand was not enough to lift prices. PlasticsExchange said it still expects PE contracts to roll flat for the third consecutive month, leaving the price up $0.03/lb for the year following a successful January increase. 

LLDPE (Linear Low Density Polyethylene) – In April 2024, the market for LLDPE saw an excess of supply causing a decline globally. Although LLDPE contracts in Europe rose in April, overall sentiment remained stable as demand eased following three months of growth.

For Your Listening Pleasure

Reading is great, but sometimes you just want to kick back and listen to something for a while.  
 
From quick-hit podcasts to a full-length documentary, this month’s audio library has a little something for everyone.

Podcast | Reining in Those Rising Logistics Costs
Total logistics costs rose by as much as 80% over the past year. Are shippers in for more of the same in the coming months? Bob Bowman, Editor-in-Chief of SupplyChainBrain, shares his thoughts. (20 minutes)

Documentary | Why Global Supply Chains May Never Be the Same
In this documentary, WSJ navigates the complex movement of goods underpinning the global economy and how it may be far more vulnerable than many imagined. (55 minutes)

Odd Lots | Jeff Currie on Why Copper Is His Highest-Conviction Trade Ever
In this episode, Jeff Currie, a long-time copper bull and commodities veteran now at Carlyle Group, talks about why copper is his highest-conviction trade ever, plus the outlook for oil and big changes in petrodollars. (42 minutes)

Doctor Copper | Minor Issues with Mark Thornton
In this episode of Doctor Copper, Mark analyzes the record-high price of copper, why Wall Street focuses on copper prices, and why this crucial economic indicator seems at odds with the weak global economy. (7 minutes)

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