Part II: Special Copper Edition | Australian Markets

Continuing with our copper focus this week, I need to discover the potential set-up in as we speak’s market.

To try this, let’s step back to 2005…

The time period ‘BRICs’ was beginning to enter investor folklore.

That’s as a result of rising international locations like Brazil, Russia, India, and particularly China had been delivering outsized growth.

After the devastating Dot Com Bust in 2000 and the September 11 assaults in 2001… Finally, a constructive story was rising for traders.

Global capital was starting to circulation from West to East.

Yet, tensions remained high within the early 2000s.

The US was doubling down on its ‘War on Terror’, and battle was raging throughout the Middle East.

Like as we speak, markets remained on edge; geopolitical anxiousness was a sturdy power protecting a lid on hypothesis.

And I’d say that issues largely stayed that manner till June 2005.

Exactly 20 years in the past as we speak.

That’s when the market bellwether, ‘Dr Copper,’ started to pivot away from the broader market.

By early 2005, this growth commodity was approaching all-time highs. Consolidating and trading within a tight vary.

And, like as we speak, few had been paying consideration.

Back in 2005, there was a sturdy case for investing in commodities

The useful resource market had been in a extended period of stagnation, affected by years of underperformance in opposition to US equities.

Lack of investment by way of the Nineteen Eighties and Nineties hinted at provide shortages.

Meanwhile, growth throughout BRIC nations emerged as a source of future demand.

But even then, a commodity bull market was in no way sure.

But then… this occurred:

Copper exploded!

In June 2005… 20 years in the past as we speak… copper underwent one of essentially the most spectacular strikes in historical past.

After breaking above its late Nineteen Eighties and mid-Nineties highs, copper skilled an unbelievable 140 per cent melt-up in 18 months.

That’s the spike you may see on the chart above.

Just to be clear, this isn’t a stock; that is the price motion for a common industrial metallic utilized in every part from plumbing to electrical work.

Under regular circumstances, a 10-20% transfer over a few months could be dubbed very ‘bullish’ for this family metallic.

The 140% surge in 2005 was merely breathtaking.

For perspective, gold’s price motion during the last 12 months has been described as spectacular… That’s been a mere 36% transfer!

But maybe essentially the most important side of that occasion is that this:

Copper’s 2005 ‘break-out’ second unleashed junior mining hypothesis.

A number of outdated information I’ve seemed up show sure junior copper stocks rising 600-800% over that period.

It was an unbelievable alternative.

Why Today’s Price Action Echoes 2005

In 2005, the technical setup aligned completely with elementary power.

And as we speak, as copper approaches all-time highs, provide and demand dynamics seem equally as sturdy.

So, sit tight; we might be close to a important turning level within the commodity cycle.

As I discussed to my paid readership group, that is what we’ve been positioning for ever since we launched Diggers & Drillers in 2022.

While we now have clocked up some ‘early’ cycle winners like NGEx and Filo Mining… I imagine there are a lot greater alternatives forward.

And that’s great news when you’re nonetheless becoming a member of D&D!

Okay, let’s flip our consideration to the basic drivers on this market—the story behind copper’s current price power.

And why does the timing look remarkably just like 20 years in the past?

Understanding Today’s Copper Price Catalyst

Like within the early levels of the early 2000s commodity increase, there’s a elementary foundation for increased copper costs.

As I discussed on Monday, the consensus view is that US imports are driving increased copper costs in 2025. Certainly, it’s important.

But I don’t imagine Copper’s document run is as one-directional as most assume.

For one factor, Chinese equities have additionally been a shock performer in 2025.

The iShares China Large-Cap ETF [ASX: IZZ] is up 17.5% year-to-date.

Or nearly 50% during the last 12 months!

Who would have thought!

It has eclipsed the efficiency of just about each different market, together with the tech-heavy Nasdaq100.

Virtually each market commentator bought the China story fallacious final yr and missed one of the market’s best-performing sectors.

That’s why I informed readers to look past the biased reporting on China and buy up useful resource stocks on the peak of the mid-year panic in 2024.

And a hat tip to my colleagues, Greg Canavan and Callum Newman who had been additionally lone voices final yr getting their readers into this spectacular contrarian alternative.

And on condition that China stays essentially the most important driver of copper demand, outperformance throughout its large-cap stocks stays an important main indicator of growth within the Chinese financial system.

Again, this has echoes of the early 2000s commodity increase.

Yet, this time spherical, there are MORE growth drivers

Tariffs and re-shoring manufacturing back to the US will require huge investment within the nation’s industrial complicated.

That will put monumental demand on commodities like copper and metal as America seems to be to rebuild its manufacturing empire.

Perhaps resembling China’s early 2000s industrial build-out!

That would possibly sound like an exaggeration, nevertheless it’s exactly what Trump’s attempting to engineer for the American financial system.

Perhaps that’s what traders needs to be focussed on after they see document volumes of copper imports pouring into the US market!

Yet, there’s one more important angle to the copper demand story that no one is addressing.

That’s what we’ll dig into in our last particular three-part sequence on the copper market.

Stay tuned!

Regards,

James Cooper,
Editor, Mining: Phase One and Diggers and Drillers