New king of copper trading sees demand coming back stronger

As head of copper trading at Trafigura Group, Kostas Bintas typically spends his time trekking around the globe, signing the deals that last year helped make Trafigura the biggest merchant of one of the world’s most crucial metals.

By March this year, he was stuck holding video calls with clients and colleagues from his home in Geneva. With the world on lockdown, the outlook for most industrial metals looked bleak. Yet even then, Bintas says there were early signs copper could emerge from the crisis even stronger.

If anything, he’s even more bullish today. Demand is bouncing back in China and stimulus packages being unleashed across the developed world promise to transform the long-term outlook — particularly with spending on copper-intensive green energy infrastructure. The coronavirus has also disrupted mines and delayed new builds, throttling current and future supply.

“Copper is coming out of this crisis differently,” Bintas said by phone from Geneva. “When lockdowns were eased and people started to return to work, we were surprised to see our customers not only taking deliveries of volumes they’d already bought, but requesting more to cover themselves in case there were any further disruptions to supply.”

Trafigura’s view adds clout to forecasts that the metal viewed as a global economic bellwether is heading for a V-shaped recovery. Not everyone is as bullish, with some forecasters suggesting copper’s rebound risks running out of steam. Yet Bintas has one key advantage: Trafigura’s vast network of traders gathering direct intel from the heart of the copper market.

The company bought and sold 4.35 million tons of copper last year, Bintas said, surpassing rival Glencore Plc as the world’s top trader. A Glencore spokesman declined to comment.

Trafigura’s case for copper

  • The virus has forced many mines to halt operations, particularly large operations in South America, and delayed work on future projects.
  • Stimulus packages are targeting areas that are highly copper-intensive, such as renewable energy and electric vehicles.
  • Climate change is also fueling greater demand for copper-heavy heating and cooling systems globally.
  • Demand looks set to rise 3.4% per year in the coming decade, which will push the market into a deep deficit unless new sources of supply are found.
  • Given the high costs of development, copper would need to trade above $7,600 a ton to incentivize long-term investments in new mining projects.
  • Despite the demand crisis, global visible inventories dropped by 412,000 tons between March and June.

“Despite the noise of what the price is doing or the equity markets are doing, the most important thing is to isolate the signal that you’re getting from customers and suppliers,” Bintas said. “You can’t get more genuine feedback than that.”

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