Trafigura warns the world is running low on copper

Global copper stocks have fallen to perilously low levels, one of the world’s largest commodity traders Trafigura has warned.

Speaking at the FT Mining Summit on Thursday, Kostas Bintas, co-head of metals and minerals trading at Trafigura, said the copper market is today running with inventories that cover 4.9 days of global consumption and is expected to finish this year at 2.7 days, according to its own forecasts. Copper stocks are usually counted in weeks. 

The price of copper, used in everything from wind turbines, electric wires to electric vehicles, is now trading around $7,400 a tonne, some 30 per cent lower compared to early March, when it was trading above a record $10,000 a tonne. 

Limited inventories raise the risk of a sudden spike in prices should there be large drawdowns and a dash among traders to secure supplies. 

While the strong dollar and global recession fears have weighed on copper prices in recent months, executives in the global metals industry argued on Thursday that limited supply in the market remained supportive of prices. 

“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. “It actually not only cancels completely the real estate weakness, but also adds to their consumption growth increase.”