- Carlyle's Jeff Currie said on the Odd Lots podcast that copper is “the most attractive deal I've ever seen.”
- He believes the large mismatch between supply and demand for the metal could push prices up to $15,000 per tonne.
- Mr Curry said industrial demand, wealth redistribution and geopolitical conflict would deepen imbalances.
Commodities industry veteran Jeff Currie is extremely bullish on the opportunity, saying copper supply issues have caused metal prices to rise significantly.
“This is the most compelling deal I've ever seen in the 30-plus years I've been doing this job,” Carlyle's chief strategy officer for energy pathways said on the Bloomberg Odd Lots podcast. ” he said. He later added, “I would like to quote many customers and other market participants as saying this is the highest-conviction trade they have ever seen.”
The metal has already soared more than 21% in 2024, and Currie, a former head of commodity research at Goldman Sachs, expects it to reach $15,000 a ton in the next few years. That would be an increase of about 46% from current levels.
The main rationale for this is that copper is in the midst of an unprecedented supply-demand imbalance, and there are three reasons why this is not just a fad, Currie said. Demand for this product is increasing, but investment and production remain lacking.
Currie invoked the acronym RED, which stands for redistribution, environmental policy, and deglobalization, to explain why he is betting on such upside risks.
beginning, Curry pointed out that low-income groups have long been bigger consumers of goods. Therefore, policies that redistribute wealth to this group are a boon for materials such as copper.
“This is very vivid. If you look at low unemployment rates, who are the biggest beneficiaries of that? It's low-income people. You know, policy is still changing all over the world. “It's still very effective in the market, and it's reinforcing that,” Curry said.
Number 2, the rise in environmental policy has led to an industry-wide race for copper. This metal is used in everything from solar cells to EV batteries and plays a central role in greening the world.
“There's the IRA, there's REPowerEU, there's China. One of the reasons why copper prices have gone up recently is that green capital investment growth in China was over 100% last year and 30% this year,” Currie said.
Although not necessarily part of his acronym, Curry said artificial intelligence is also growing demand in the industry. After all, advances in technology depend on improvements to the power grid, which will effectively be determined by copper.
The third, Currie said deglobalization has become a much bigger theme than analysts imagined. That has led to increased military spending, with the US spending $95 billion on munitions.
However, this has not yet resulted in a supply-side boom. The decline in inventories has not been helped by mine production, which has stalled amid political and financial challenges. As an example, Panama's mines, which are responsible for 1.5% of global production, have been dormant since November.
Part of the reason, in Currie's view, is that large sector players remain reluctant to lean into new investments, as opposed to taking over existing mines through mergers and acquisitions. .
“There is no need to look beyond the Anglo-American bids,” he said. “BHP thinks it's cheaper to buy Anglo American than to drill into the ground. And that's true almost across the board, and it's finding ways to increase supply, particularly through M&A activity.” Let's call it organic, greenfield investing. ”
But he said this is normal at this stage in the cycle, noting a similar pattern in the 2000s. At the time, it took years for investors to start taking the field more seriously.
