Dr. Copper Is a Star of the Clean Energy Revolution...

Copper has been the star performer of the “COVID recovery.” Since the low recorded on March 23, 2020, it is up 112%. In May 2021, it set an all-time high price of over $10,500 per metric ton…And so far in 2022, it has been trading close to those record levels. The reason is simple: soaring demand. And not only from the traditional sources like construction and transportation… but new ones, like electric vehicle (EV) batteries and solar. In a moment, I will tell you about why I think that copper is still in a supercycle… and how to profit from what happens next. Let’s see what is driving copper and what to expect from it this year.

Copper Demand Is Still in Place

First off, the world hasn’t stopped using copper during the pandemic. Even though the global economy slowed down, the demand for refined copper was at all-time highs. You can clearly see this trend in the chart below. (Lighter bars indicate estimated values.)

The overall trend is up, and it’s set to continue. And most of the demand is coming from Asia… not only because China has traditionally been a big source of infrastructure demand, but also because China has become one of the global leaders in adopting clean energy and electrical infrastructure.

In other words, China needs a lot of “green copper,” since the metal is an important component in green technologies. For example, electric vehicles require greater amounts of copper. A conventional gas-powered car holds 18 to 49 lbs. of copper, while a battery-powered EV contains 183 lbs.

Besides… renewable energy installations use about five times more copper than traditional energy systems. These facts, as well as China’s rapid expansion of its clean energy infrastructure, speed up the demand for copper. And this demand is here to stay. China is already leading the world in electric vehicles, green energy, and energy storage. It could reach some of its green energy goals faster than expected. For example, it planned to reach 1,200 gigawatts (GW) in renewable energy generation by 2030. But new estimates tell us that it could reach that target in 2026, according to the International Energy Agency which means it will need more copper than initially estimated… and quickly.

China could also grow faster than the rest of the world in 2022… which is positive for copper. Bloomberg forecasts predict that China’s GDP will grow 5.2% this year. That’s 0.9 percentage points higher than the rest of the world… and 1.5 percentage points higher than North America.

The bottom line is, copper keeps getting a boost from multiple global players.

The Best Way to Capitalize on This Trend

First, I would suggest getting some exposure to the metal itself. An ETF like the United States Copper Index Fund (CPER) is a good start. The ETF is based on an index tracking a portfolio of copper futures. It’s a great way to get copper exposure.

Second, I would also get some exposure to the clean energy industry. It is a major consumer of copper – and for a good reason: the world is going green, so there’s potential in this sector. To benefit from this trend, you might want to consider looking at the iShares Global Clean Energy ETF (ICLN). It holds a portfolio of global clean energy stocks… many of which are dependent on copper.

The copper supercycle continues… and there’s still time to profit from it. Good investing !!!

============================================================

Courtesy Of Andrey Dashkov - Casey Research USA