While we in the West are focused on the expected gas shortages this winter, it’s not the only commodity that is in short supply these days. A top executive at commodities trading house Trafigura warned last week that global supplies of copper are near historic lows.
That may not seem that big a deal as the prospect of recession moves ever closer, but when one considers that the metal is used in everything from consumer electronics to piping to roofing to solar panels and many things in between, it’s clear that a shortage and ensuing price spike would only exacerbate what is already the worst cost-of-living crisis in many people’s lifetimes.
Global inventories of the metal cover less than five days of consumption, Kostas Bintas, who co-leads metals and minerals trading at Singapore-based Trafigura, told a Financial Times conference. Usually the available stock would cover weeks of demand.
“While there is so much attention being paid to the weakness in the real estate sector in China, quietly the demand for infrastructure, electric vehicle-related copper demand, more than makes up for it,” Bintas said.
Even with the China slowdown, copper demand continues to rise, he added, pointing to the move to renewable sources of energy as one of the key drivers of demand.
Now, a cynic might say it’s in Trafigura’s interest to see a higher copper price. Higher prices mean greater revenue for a trading house, after all. Copper prices remain well below their highs of March, while the spread, or difference, between the price of copper for delivery today and in three months’ time has narrowed on the London Metal Exchange – usually a sign that traders aren’t concerned about a supply squeeze in the immediate term.
Yet the reality is that commodity consumption is more or less rising across the board, with or without a recession, and the copper market is watching for a spike in prices. That has implications for Ireland. With the price of raw materials soaring across the board, home-builders are already paying more and that is going to be passed on to customers.
The inflation rate may have eased in Ireland last month but prices are still rising. If prices for a raw material as ubiquitous as copper rises again, consumers here will feel the pain.
