Copper is one of the most widely used metals worldwide. The wiring in our homes, electronics, and plumbing, to electric cars and beyond. And when a resource is as versatile as copper is, it makes a great opportunity for investment.
Well, unlike precious metals such as gold and silver, which tend to draw most of the attention from investors, copper tends to be forgotten. And due to the pandemic, the price of copper dipped making it a low price, yet widely used resource.
With how widely used this base metal is, it is a wonder why so many investors decide to overlook it. Well, once you know and understand the factors that change the price of copper, you can start making your own investments. So, what does the copper forecast in 2021 look like?
2020: A Pandemic Year Review for Copper
The year 2020 was not particularly good for most people, as the pandemic managed to throw more than a wrench in our daily lives. The pandemic also caused the price of copper to take a bit of a dive in the early months as it did with most commodities. This is likely due to a demand slump in copper as the world has been temporarily halted.
As time passed, the price and demand for copper began to rise as the world’s economies opened up little by little. One big reason for the increase in demand was the surge of green technology investing. As said before, copper is found in a lot of modern technology and that is unlikely to change anytime soon.
Price Performance Review: 2021
At the beginning of 2020, copper prices were trending above $6000 US, which is not a record high but certainly not a record low. But like most stories in 2020, that changed as the novel coronavirus swept through the world.
The increased lockdown and containment measures used to combat the widespread virus also helped shut down supply and demand. As a result, three months into the new decade and copper had plummeted to a new low point at around $4,6000 US.
Luckily, the copper price slump did not last the whole year, as some countries, such as China, began their recovery efforts. China, the world’s largest copper consumer, began consuming copper in quarter two of 2020, which helped spark the price of copper which subsequently carried it through the rest of the year.
Increasing Demand in 2021
The copper forecast in 2021 sees it continuing to rise as world economies continue to recover from the novel virus.
In particular, China has driven up this increase in demand since it consumes a little more than half the world’s copper supply. It would seem that China used its early recovery to take advantage of copper’s low price throughout the first half of 2020.
Copper price predictions from Wall Street banks like Goldman Sachs, have the base metal reaching over $8,500 US. But what is driving up the price of copper and its demand, outside of China’s consumption?
Think green technology, and where the world’s technologies are headed. How many news reports or advertisements have you seen for electric vehicles in the past year or so. The technologies, tools, and construction of tomorrow rely on copper’s availability today. Now is the time to get in on the boom.
Supply Chain Scrutiny To Increase
When looking at the supply side of the copper market, you should know that the largest suppliers right now are Chile and Peru respectively. Both are expected to grow, especially Peru, a country hit hard by COVID-19.
While the virus plays a factor in disrupting the supply chain for copper, it is not alone. Oftentimes, especially in goods that are mined, a mining union will take advantage of soaring demand, in this case for copper, as a bargaining chip.
In other words, miner’s unions may recognize a demand rise, which results in a supply rise, which means more work for them in dangerous conditions. And with Chile and Peru holding elections this year, there is a chance that a disruption in the supply chain may occur.
Things such as pollution from emissions to how mining materials affect local communities will likely result in supply chain disruptions.
Top Stocks To Look After in 2021
As we enter the new year, there are several stocks you should consider investing in. So far, the copper forecast for 2021 looks like it could be hitting record highs. Along with copper outlook, you should be looking at anything related to recovery efforts as economies begin coming back.
Take advantage of stocks in green energy technology or related technologies. As said before, copper will play a pivotal role in the coming years as we continue developing new cars, buildings, and technology. factors investors should watch that could impact the copper space.
Now, let’s be clear, you should be reluctant to invest in things that would have benefited companies in 2020. In other words, it would not be a great idea to invest in something that was only rising because of COVID-19
Instead, your 2021 investment should be geared towards world recovery efforts.
Although some things from pre-2020 will all but be left behind, there are plenty of markets that only went away due to the virus.
Lastly, as the world begins to return to “normal”, think about the activities and commodities people were consuming or doing before. What ones do you think people will rush back into, such as a movie theater, and make your investments based on that.
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