Why copper has long been a technology investment
No time right now?
Copper is in demand from numerous industries. This also includes the automotive sector – and above all e-car manufacturers. What about the copper market and how investors can invest.
When investors invest in future technologies, it is often about digital business models, future sales opportunities or the use of data as a raw material. But sometimes aspiring companies like Tesla, BYD or Nio run into very classic problems – like the scarcity of raw materials. While the discussions in connection with electromobility often revolve around lithium or rare earths, another raw material is now extremely scarce: copper. The industrial metal has been a benchmark for economic development for decades. Whenever the world is being built or invested in infrastructure in any other way, we need copper.
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There is 3 times more copper in electric cars
It is not for nothing that Dr. Called Copper. The price of the industrial metal is an indicator of the state of the world economy. If copper is expensive, the economy is usually good too. If copper collapses, a recession is not uncommon. Since the outbreak of the pandemic, the price of copper has increased by more than 40 percent. At first the industrial metal also collapsed, but then quickly recovered and eventually pulled away from many other raw materials. Why is that?
In addition to the many classic areas of application for copper, the metal plays a central role in electromobility. Every electric car contains around three times more copper than every classic combustion engine. There is also the charging infrastructure, which also cannot do without copper. If the goals related to climate neutrality and clean inner cities are to be achieved, it will not work without copper – this is exactly what the price has been showing for months.
Also interesting: the number of investors in Germany is increasing rapidly
Thanks to “Dr. Copper “lean back and relax
Now one could get the idea that the copper rally has already reached its potential. But that’s not the case. China, which is responsible for around 50 percent of global copper consumption, is currently pausing on the world market, but there are other signals that are promising. Firstly, the stocks on the largest commodity futures exchanges have recently steadily decreased. Anyone who deals with the commodity markets concludes that the demand is real and is not driven exclusively by speculation, since the copper is delivered. In addition, many mines, especially the giant projects in South America, are reaching their limits. Not to mention the often negative consequences of the poorly regulated mining. Although experts expect the copper supply to increase compared to the previous year due to the dwindling threat posed by the pandemic in 2021, this cannot yet meet demand.
The rising copper price is a good sign for investors. He interprets in the style of “Dr. Copper ”claims that the economy is in good shape. There is also the possibility of benefiting directly from the copper boom. This can be done, for example, by investing in large copper producers such as Rio Tinto, BHP Group or Vale. The bonds from these companies can also be interesting as part of a balanced investment concept. There are also numerous smaller companies that have not yet received much attention from the market.
The mining industry is also sustainable
One development that could pick up speed within the copper trend is the sustainable extraction of raw materials. Customers of Tesla or other providers of electromobility consider it important that the entire value chain in the production of electric cars is sustainable. Raw materials companies that already focus on the implementation of ESG criteria could soon be ahead of the game if the new industrial giants transfer their sustainable agenda to the supply chains. Even if copper seems like a boring investment at first glance, the market is predestined for a positive development. At the same time, there is a good deal of future fantasy. Copper is therefore worth a look.
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