Hedge fund manager Pierre Andurand forecasts a near quadrupling of copper prices to $40,000 a tonne in the coming years, driven by surging demand that is depleting global stockpiles of the red metal, according to a report by the Financial Times.
Andurand’s bullish outlook on copper has fueled a remarkable recovery for his $1.3bn Commodities Discretionary Enhanced fund, which rebounded from a 55% loss last year due to failed bullish oil bets. The fund has surged 83% this year, with gains spread across a variety of commodities, according to Financial Times’ sources.
Copper, essential for the energy transition, has climbed nearly 20% this year, reaching a record $11,000 a tonne this week. However, Andurand, a former Goldman Sachs trader and co-founder of BlueGold Capital before launching Andurand Capital, believes the rally has much further to go as supply struggles to meet escalating demand.
In an interview with the Financial Times, Andurand said: “We are moving towards a doubling of demand growth for copper due to the electrification of the world, including electric vehicles, solar panels, wind farms, but also military usage and data centres.
“I think we could end up at $40,000 per tonne over the next four years or so. I’m not saying it will stay there then; eventually, we will get a supply response, but that supply response will take more than five years.”
The challenging and costly process of increasing copper supply, highlighted by miner BHP’s bid for rival Anglo American, underscores the difficulties of developing new sources compared to acquiring existing operations. Industry estimates indicate it typically takes 15 years to develop a new mine, though Andurand believes current mining efforts will fall short of meeting the growing demand for copper.
Reflecting on his previous misstep predicting oil prices would hit $140 a barrel, Andurand acknowledged the lessons learned from unmet expectations of supply disruptions.
He said: “I think oil traders have learned to be quite cautious about getting excited about potential supply disruptions.
“I think we all lost a lot of money, expecting supply disruption that did not happen. You remember that pain.”
Brent crude currently trades at $81.50 a barrel, significantly below its nearly $98 peak in September.
Having made substantial gains in energy markets during the coronavirus pandemic and early stages of the Ukraine war, Andurand no longer anticipates a significant spike in crude prices.
Despite last year’s losses, the fund’s annualised net return from its inception in June 2019 stands at 34%, according to another Financial Times source.
In addition to his optimism about copper, Andurand is bullish on other commodities, including cocoa, which tripled in price from the start of the year to mid-April, as well as aluminium, which he expects to continue rising in price due to its potential as a substitute for copper.
