Decreasing Supply Could Boost Copper Prices in 2024

A report by global research firm IndexBox is forecasting exponential growth for the copper market in the next seven years. If that occurs, it opens the opportunity for investors to look at copper-focused ETFs to get growth exposure and asset diversification.

“The global copper ore market is expected to experience substantial growth by 2030,” Yahoo Finance reported. “This growth is primarily driven by increasing demand for copper in various sectors, including construction, electrical and electronics, and automotive industries, underpinned by advancements in mining and ore processing technologies.”

Another catalyst for rising prices will be tighter supplies due to disruptions in the copper mining market. As reported by Reuters, a spate of mine closures and potentially more to come could crimp global supply. That could push prices even higher. The Reuters report noted that First Quantum, a Canadian-based mining company, experienced supply disruptions at its “Cobre mine in Panama, accounting for 1% of global mined supply last year.” It also noted that its “future is uncertain due to the country’s top court declaring as unconstitutional First Quantum’s contract to own and operate the mine.”

2 ETFs Options to Ponder

Potential mine closures would pressure other miners to continue supply and thus capture more market share. This could be a boon for the Sprott Junior Copper Miners ETF (COPJ). The fund seeks to provide investment results that track the total return performance of the Nasdaq Sprott Junior Copper Miners Index. The index incorporates mid-, small-, and micro-cap companies entrenched in copper-mining-related businesses. COPJ offers a backdoor play on miners as demand grows for copper. So will ancillary services like mining.

A broader play to consider for investors wanting generalized exposure to critical minerals is the Sprott Energy Transition Materials ETF (SETM). Per its fund description, SETM seeks to provide results that correspond to the total return performance of the Nasdaq Sprott Energy Transition Materials Index, which essentially tracks the performance of a selection of global securities in the energy transition materials industry.

With the demand for overall critical minerals projected to rise, the demand for miners that materially affect the supply will also increase. Given this, SETM provides investors access to the miners who produce uranium, lithium, copper, nickel, silver, manganese, cobalt, graphite, and also rare earth elements.

For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.