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Copper miners to see profit grow further in 2018 — report

After struggling with falling copper prices since 2011, producers of the red metal are finally recording profits thanks to this year's upswing. And, according to analysts at S&P Global Market Intelligence, the miners’ profit margins are set to grow further in 2018.

Copper prices are up 24% since the beginning of the year and 58% from the lowest seen in recent history — $1.96 a pound on January 2016.

As of October 30, prices for the industrial had increased 24% since the start of the year and by 58% since the lowest price seen in recent history — $1.96 a pound in January 2016.

Some, such as S&P senior research analyst, Adam Webb, attribute the price recovery to lesser pressure to cut costs at copper operations, despite some upward pressure on mining costs.

“Total cash costs in the copper-mining sector are expected to be approximately 6% higher in 2017 compared with 2016. However, the higher metal prices has provided respite to many copper miners, which had been forced to cut costs and reduce capital expenditures in the wake of falling copper prices since the highs seen in 2011,” Webb said in a report Friday.

Copper miners to see profit grow further in 2018 — report

Others attribute copper’s outstanding performance to the electric cars ongoing boom. The metal is a key component of the lithium-ion batteries used in the electric vehicles, as well as power inverters and in the charging infrastructure needed to keep them running.

Currently, electric cars add up to roughly 1 million, out of a global fleet of closer to 1.1 billion, world’s No.1 mining company BHP estimates. That figure, it believes, could rise to 140 million electric vehicles, or 8% of the global fleet, by 2035.

Profit margins to jump

Using S&P Global Market Intelligence's flexing mine model and a consensus of broker macro-economic forecasts for 2018, Webb and his team looked at the forecast copper cost curve for next year.

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