2024 Copper Stocks Investment: Why Is Now a Good Time to Enter?

Copper prices are currently hovering around $8,500/ton. What does this mean for investors? In simple terms, tight supply combined with demand recovery has significantly increased the attractiveness of copper stocks.

Supply Side: Mine Expansion Remains Distant

Let’s start with a sobering fact: global copper mine supply is concentrated in a few countries. Chile accounts for 27%, Peru 11%, the Democratic Republic of Congo 7%, with the remaining 55% divided among other nations. Last year, global copper mine production was 31.6 million tons, but worryingly, there are no major expansion plans underway in the industry.

Why? Because building a large-scale mine takes years, and companies are reluctant to take risks. This has led to a key phenomenon: LME copper inventories are at low levels. Historically, lower inventories mean greater price pressure.

In 2023, several major mines experienced production cuts, which have not yet fully recovered. Coupled with the traditional off-season during the Chinese Spring Festival (usually mid-February), inventories are expected to rise initially but continue to decline after March. This creates a solid foundation for copper prices to rise.

Demand Side: New Energy Is the True Engine

Growth in copper consumption in traditional sectors is only about 0.5%-1.5% per year. But in new energy—it’s a whole different world.

Electric vehicles use four times more copper per vehicle than internal combustion engine cars. Wind power requires 1 ton of copper per megawatt, while solar power needs 4 tons per megawatt. The annual growth rate of these emerging industries is between 10% and 20%.

Although currently, new energy applications account for only 7% of global copper consumption (2.84 million tons vs. 28.8 million tons in traditional applications), the growth trajectory is very clear. At this rate, by 2030, copper consumption in the new energy sector could double to about 17%.

The global economy is rebounding from the bottom. The Federal Reserve is expected to start cutting interest rates in March, Europe will follow in mid-June, and China has already lowered the reserve requirement ratio in January. This liquidity release is likely to boost overall growth expectations and, in turn, lift commodities.

Copper Stocks vs. Copper ETFs vs. Futures: How Should Investors Choose?

Copper mining companies (such as Freeport-McMoRan, Southern Copper) have about an 80% correlation with copper prices. The advantages are dividends, share buybacks, and benefiting from corporate innovation and cost control. The downside is that they can fluctuate due to non-price factors like strikes, tax increases, or technical failures.

Copper ETFs (there are 7 options on the market) track spot prices more closely and do not carry the operational risks of individual companies. However, they have an annual fee rate of up to 1% and do not pay dividends. For investors seeking stable tracking, they are a good middle ground.

Copper futures contracts are valued at around $9,600 per contract, which is too heavy for retail investors. Plus, futures involve leverage, making them very risky. They are suitable for hedging existing positions but not recommended for ordinary investors to go long directly.

Considering all factors, copper stocks are the most recommended—they offer price upside potential and the chance to benefit from corporate value creation.

Investment Operation Manual

Long-term investors should look for companies with solid fundamentals, strong cost control, and diversified mineral portfolios. But one key point: copper is a cyclical asset, not a growth stock. During economic downturns (like 2008, the COVID-19 pandemic in 2020, or the Ukraine conflict in 2022), copper stocks tend to fall along with the broader market.

Recommended approach:

• Allocate 5%-10% of total assets
• Set stop-loss levels in advance
• Monitor global macro cycles, enter early during economic recovery, and reduce positions when overheating signs appear

Short-term traders need strong technical analysis skills. The core idea is to watch LME inventory data and global growth signals simultaneously, riding the trend. Freeport-McMoRan has the highest correlation with copper prices and is the top choice for short-term trading.

Key principle: expected returns must be greater than or equal to stop-loss amounts, with a win rate above 50%. This requires continuous market monitoring.

Macro Support: Why Will Copper Strengthen in 2024-2025

The world is freeing itself from the constraints of high interest rates and low growth. The probability of avoiding a recession in the US is high, Europe’s growth remains sluggish but stable, and China is maintaining 4%-5% growth supported by policies.

A rate-cutting cycle typically stimulates a rebound in commodities. Coupled with bottomed-out inventories, accelerating demand from new energy, and the difficulty of rapidly expanding mineral supply, the probability of copper prices rising to the $9,500-$10,500 range (about 24% upside from current levels) is quite high.

Of course, risks exist—unexpected inflation shocks, escalation of geopolitical conflicts, or other black swan events could disrupt this outlook. But based on current fundamentals, these risks are relatively manageable.

Action Checklist

When selecting stocks, use fundamental analysis tools (free data from Macrotrends website), focusing on companies’ cost curves, reserve quality, and diversification. Also review the latest announcements on investor relations pages.

In position management, set clear stop-loss levels and avoid overconfidence. Regularly review global economic data and LME inventory trends to adjust holdings accordingly.

At this point in time, copper stocks are recommended not only because of short-term rebound opportunities but also due to copper’s strategic importance in the upcoming decade of the new energy era. But the key is to manage risks carefully, avoid over-concentration, and turn this cyclical opportunity into sustainable gains.