Copper has been in an uptrend this year but a Wolfe Research analyst is not convinced that now is a suitable time to invest in it.
Timna Tanners shares her view on copper
Timna Tanners is not buying the warning that copper will soon be in short supply. Explaining why on CNBC’s “Street Signs Asia”, she said:
We’re more copper sceptic. I don’t understand why no one’s talking about four large copper mines that are ramping up now. Those will be material.
Copper bulls are overly focused on demand from electric vehicles. But that, Tanners noted, makes up under 10% of the demand only versus 20% from the Chinese property sector which remains rather weak.
Versus mid-March, copper futures are up nearly 4.0% at writing.
Why else is she dovish on copper?
According to Wolfe’s Tanners, weakness in the purchasing managers’ index (PMIs) also suggest caution when investing in copper.
The analyst is not too concerned that Codelco produced 172,000 fewer tonnes of copper in 2022 since it was well telegraphed. Speaking with CNBC, she noted:
Copper bulls over the years have been warning of running out of copper. This isn’t the first time. Where they’ve been wrong time and again has been on the demand side. So, we think it’s too early to get quite that excited.
If electric vehicles adoption progresses at a slower than expected pace moving forward, that could further hurt the bull case for copper, Tanners concluded.
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