Copper price to rocket to $40,000 a tonne, says top trader Andurand

Source: Financial Times

Date: May 24, 2024

By: Costas Mourselas and Malcolm Moore

Hedge fund manager Pierre Andurand expects the price of copper to almost quadruple to $40,000 a tonne in the next few years as soaring demand causes global stockpiles of the red metal to run low.

Andurand’s conviction on the copper market has helped his $1.3bn Commodities Discretionary Enhanced fund rebound from a 55 per cent loss last year that came as his bullish oil wagers backfired badly. The fund is up 83 per cent this year, with the gains coming from a broad range of commodities, according to people familiar with the performance.

Copper, a critical metal at the heart of the energy transition, has risen almost 20 per cent this year, touching a record $11,000 a tonne this week. But Andurand, one of the world’s best-known commodity traders, thinks the rally has much farther to run, as supply struggles to keep up with demand.

“We are moving towards a doubling of demand growth for copper due to the electrification of the world, including electric vehicles, solar panels, wind farms, but also military usage and data centres,” he told the Financial Times.

“I think we could end up to $40,000 per tonne over the next four years or so. I’m not saying it will stay there then; eventually we will get a supply response, but that supply response will take more than five years.”

Miner BHP’s bid for rival Anglo American has also been seen as a sign that it is more difficult and expensive to build new supply than to buy a rival with copper mines.

Andurand, a former Goldman Sachs trader who co-founded BlueGold Capital before launching Andurand Capital, believes that digging deeper and faster in current mines will not be enough to keep up with growing demand for copper. The industry estimates it typically takes 15 years to develop a new mine.

Andurand also said he had been chastened by a prediction that oil prices would rise to $140 a barrel, which failed to pay off despite conflicts in Ukraine and the Middle East.

“I think oil traders have learned to be quite cautious about getting excited about potential supply disruptions,” he said. “I think we all lost a lot of money, expecting supply disruption that did not happen. You remember that pain.”

Brent crude trades at $81.50 a barrel, well below a peak of nearly $98 in September.

The Frenchman, who made huge gains in energy markets during the coronavirus pandemic and the early stages of the Ukraine war, said he no longer expects a large run-up in crude prices.

“The geopolitical risks such as Russia and Gaza have not had an impact on supply, so I think that is why the oil price has been relatively stable, and I expect it to remain that way. I do not expect a large move in oil prices,” he said.

Despite last year’s losses, the fund’s annualised net return from inception in June 2019 is 34 per cent, according to a source who has seen the numbers.

Andurand also has a bullish view on other commodities, including cocoa, which tripled in price from the start of the year to mid-April, and aluminium, which he thinks will keep rising in price for similar reasons to copper, as it can be substituted for the red metal.

Additional reporting by Harry Dempsey in London



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