Trafigura, one of the world's largest metals and oil traders, is doubling down on its bets on metals as it expects demand for materials such as copper, aluminium and nickel to soar as China reboots its economy and makes an energy transition, while supplies of some base metals are already tight.
On a recent trip to China, Jeremy Trafigura, chief executive of Trafigura, said: Will met with representatives of Chinese trading companies and metal associations to discuss joint ventures and deeper cooperation. For Trafigura, the focus on China makes sense because Chinese demand will drive the consumption outlook for base metals and because metal processing capacity has been concentrated in China for decades. Speaking at the China Nonferrous Metals Industry Association in Beijing at the end of March, Mr Weill said Trafigura sees increasing business opportunities for base metals in China.
While Trafigura says it remains committed to building its presence in the fast-growing battery metals market, it is also doubling down on base metals and sees copper and zinc as the commodities likely to see the biggest price surge due to low inventories.
Trafigura recently forecast that copper prices could hit a record high within the next 12 months, citing China's economic recovery and supply shortages.
Costas Trafigura, global co-head of metals and minerals, Speaking at a Financial Times event last month, Mr Bintas said copper prices could hit an all-time record of $10,845 a tonne or even break through $12,000. Speaking at the FT Global Commodities summit, Mr Bintas said he thought the next 12 months were likely to see new highs in copper prices. How high would the price of something the world needs but we don't have?
Back in December 2022, Trafigura warned in its 2022 financial results that even after several new projects come online in 2023, there will be a growing supply gap and tight supply will be the new normal for copper.
At the World Economic Forum in January, Trafigura's Weill said that if net zero emissions were to be achieved by 2050, two-thirds of energy would need to come from renewables by 2030. In this case, we need to increase copper production by 20 per cent a year. The same goes for aluminium and zinc, which are needed to build solar and wind farm infrastructure. Mr Weale said stocks of metals had fallen to "quite a dangerous stage".
Just before the U.S. banking panic rocked markets in mid-March, Weill said last month that even the more conservative in China were more optimistic about the outlook for Chinese growth and metals demand. And demand for metals is growing not only from China, but also from advanced economies, thanks to increased consumption in the United States and Europe as they push ahead with the energy transition.
At the same time, the problem facing metals supply is the long lead time from investment decisions to mining and processing. Metal processing has been concentrated in China for the past three decades, and now it must expand beyond China for a number of reasons. The problem is that these things take a long time to prepare.
Weale also warned that tight supplies could threaten the pace of the energy transition. That, he says, is one of his biggest concerns about this energy transition: actually, given the tight supply, can we make it?
