BHP Gains from Copper Strength Amid Supply Disruptions
Copper prices have been firming up, and this strength is offsetting weakness in bulk commodities for diversified producers like BHP. The red metal has seen a significant supply disruption at major global mines, which has tightened concentrate availability.
Treatment and refining charges, which smelters receive for processing concentrate, have compressed to unusually low levels as a result of the scarcity. This is a direct signal of concentrate scarcity, as smelters compete for feed by accepting lower charges.
The structural argument for copper rests substantially on the difficulty of adding supply. From discovery to first production, a major copper project typically takes well over a decade, encompassing exploration, feasibility work, permitting, financing, and construction.