Market Analysis | CopperVaults.com

Why Investors like Copper

Copper is called the ‘King of Green Metals’ because of the usage in multiple applications, for batteries, electrical traction motors, solar PV technologies, wind turbines. The national electric grids required for the electrification of the world consume huge units of copper.

Price Appreciation due to underlying demand: Copper has important industrial applications, especially in key growth areas such as electric vehicles and electrical infrastructure. These applications ensure that demand continues to put upward pressure on the metal’s price, keeping it rising.

Positive Financial Drivers

Inflation Hedge: Commodities such as copper can act as inflation hedges, allowing investors to capture price increases that may otherwise be passed along to end users.

Shelf Life: The Copper Cathode does not have a shelf life, it remains in good condition, for many years. Whilst the product is heavy, it can be sensibly transported around the world, using standard shipping containers or rail transport.

Market: The Market will never go away, it is here to stay! Copper has been used for thousands of years and will continue to be used indefinitely! These Global resources are limited which protects its position as the leading commodity in the industrialised world. The financial benefits of trading in copper have been evident for thousands of years and will continue to reap benefits for its investors.

Conductivity: The conductivity of copper has unique properties, other natural resources such as Gold (Au) or Silver (Ay) are equally good, but the volumes dictate that only copper is viable for large commercial applications, protecting copper’s market domination.

Barriers to the Copper Market

Supply and demand dynamics: The fundamental principle of supply and demand plays a significant role in determining copper prices. Increased demand for copper, particularly from industries focusing on electrification, transmission, electronics, and EV’s can drive prices up. The green transition has become an increasingly important driver behind copper demand growth, occurring at a time where miners are struggling with higher input prices from fuel, construction material and labour, as well as lower ore grades requiring more materials to be dug out of the ground to retrieve the copper. Also, rising regulatory and start-up costs for new projects have led to a prolonged period of mismatch between increasing demand and inelastic supply.
Weather and natural disasters: Extreme weather events like hurricanes, floods, and earthquakes may significantly disrupt copper mining and transportation infrastructure. This can affect supply negatively and in turn drive up prices. Our intention is to agree ‘Take-Off’ agreements with a minimum of six suppliers, and three continents.
Global economic conditions: Copper is widely used in construction and manufacturing, so its price is sensitive to changes in global economic conditions, not least in major economies, such as China and the United States.
Monetary policy: The policies of the US Federal Reserve significantly influence the price of commodities, including industrial metals such as copper. If interest rates rise, this can cause a price negative period due to destocking, while the opposite may be the case when interest rates fall.
Investor sentiment and speculation: Like other commodities, copper prices can be influenced by investor sentiment and speculative trading in commodity markets. Factors such as geopolitical tensions, trade disputes, and macroeconomic policy decisions can affect investor perceptions and lead to price fluctuations.

Trading in Copper from an Investment Perspective

Here are a few ways Copper is traded from an investment perspective:

Supply: Supply tightness in the copper market is being driven by structural and emerging challenges. Exceptional low processing fees caused by an oversupply of smelting capacity particularly in China has placed financial strains on global smelters. Constricting the supply chain.
Demand: China has given an additional boost to copper prices having announced a new action plan to boost domestic consumption. The stimulus is seen as a positive signal for copper demand especially as retail sales have already shown stronger than expected growth earlier in the year.
Exchange-Traded Funds (ETFs) or Commodities (ETCs): One way to gain exposure to copper is with copper ETFs (or ETCs). Copper ETFs are investment funds that either track the price of copper, mostly through an underlying investment in copper futures contracts, or a basket of major mining companies. Investing in ETFs provides exposure to the price movements of copper or copper miners without the need to directly trade futures contracts or own individual mining stocks. Just like equities, copper ETFs are traded on major stock exchanges, making them easily available.
Copper Miners: Another, more indirect, way to gain exposure to copper prices is to invest in copper miners. It is worth noting that no pure copper miner exists; they always mine something else such as gold, silver, or other industrial metals. Investing in mining companies or ETFs that hold a basket of mining stocks provides exposure to copper prices. However, these investments carry operational risks and may exhibit higher volatility compared to copper itself.
Physical Copper Purchasing: Typically, industrial clients purchase product in copper cathode or copper plates between 2000 and 20,000 metric tonnes per order. They could be a single purchase or what’s known as an ‘Offtake-Agreement’ which typically covers 12 months with an agreed volume. The price is linked to the LME price known as the ‘Strike Price’ on the day of signing the contract. Prices during 2024-2025 have varied between $8,470 to $10,230 per metric tonne, which is a 17.3% variance during the year.
The Power Shift Behind the Scenes with Commodities: The mining industry has minted record profits for commodity traders since 2022. The likes of Glencore, BHP, RTZ, Freeport, Anglo American and Antofagasta aren’t just sitting on cash they are buying the future. These firms are locking down and tightening their grip on global trade flows

Copper Vaults’ Intentions

Copper Vaults’ intention is to have a blend of physical stock, Copper Cathode Bars/Plates and hold 30% of a month’s trade, which as well as giving us credibility with potential clients, also demonstrates financial stability and robustness.

We believe that forming a specific Copper Trading Desk, solely focused on copper both on the Buy Side & Sell Side, will create ‘Singular Focus’ and transparency that is clearly understood by all.

Controlling the value chain gives a real competitive advantage when facing business cycles. Copper Vaults intends holding physical stocks of no less than $100 million to ensure that orders can be processed expediently.

Copper Vaults intends to attract Investment, by offering a way for Investors to have exposure to a blend of:

Physical Copper
Arbitrage plays on both the Buy/Sell side of trading
Transactional Trading
Inter-Continental exposure on Copper Trades
Corporate Growth, as the potential via increased stocks of copper

Copper Cathode and Copper Plate

Copper is found mainly in sulphide minerals and oxide minerals. The primary source comes from sulphide minerals, which are crushed before being sent to a concentrator. The concentrate is then pumped to a smelter where flash smelting and flash converting furnaces generate copper matte and copper blister. Anodes are then cast and sent to refinery. At the refinery, the anodes are plated to starter sheets in an electrolytic process to produce copper cathode.

Sizing

Each cathode has two sides, joined at the bottom.

Length 39” (990 mm)

Width 39.125 (993 mm)

Thickness 0.19 (4.82 mm)

Total 0.38” (9.64mm)

Transportation

Strapped in 5,500lb bundles

Railcars 206,500 lbs (94t)

Trucks 43,500 lbs (20t)

Marine Containers 57,000 lbs (25t)