By Aditya Raghunath
Copper prices have risen to over $9,000 a metric ton for the first time in nine years. The world is facing a shortage of copper and the price for the metal is shooting through the roof around the world. The situation is no different in India. Stocks like Hindustan Copper Ltd (NS:HCPR), Hindalco Industries Ltd. (NS:HALC), and Vedanta Ltd (NS:VDAN) have seen their prices move in tandem with the global copper rally.
Hindustan Copper Ltd (NS:HCPR) has risen over 73% since December 31. It is currently trading at Rs 105.9 compared to Rs 61.15 on December 31. Hindalco has risen 35% to Rs 324 today compared to Rs 240.55 on December 31, and Vedanta is at Rs 207 today, up almost 29% from Rs 161.5 on December 31.
The major reasons for this are:
- Chinese buying: China is buying up copper-like nobody’s business. There is a huge demand for copper and it has met a huge shortage. Goldman Sachs Group Inc (NYSE:GS) has warned of a historic shortage with “the market now on the cusp of the tightest phase in what we expect to be the largest deficit in a decade” as Chinese buying “triggers the next leg higher”. Goldman says they expect copper prices will near a record very soon.
- Demand for renewable energy: The world is adopting renewable sources of energy at breakneck speed. And guess which metal is very important as a raw material? That’s right, it’s copper. As demand for renewable energy grows, so does the demand for copper.
Trillions of dollars in stimulus: Governments across the world are unleashing stimulus packages like never before. Commodity prices are going up and copper is one of the main beneficiaries in this space.