The forecast trap

Copper prices are down. They are very much down and this is happening right when everyone seemed to expect them to be going up, The reason: according to economic indicators from China, Europe, and the United States, growth was, so to speak, not happening as expected.

Oil prices have also struggled to rise despite OPEC+ cuts and upbeat demand projections, again because of those economic indicators — the bane of market bulls’ existence right now.

China, these indicators seem to show, is not recovering from the pandemic as strongly as analysts forecast. Europe and the U.S. are not in as good an economic shape as they could be or, to be more accurate, as we were told they would be. Horror of horrors, Germany is now officially in a recession and it is endearing to see how media are trying to not use the word.

Whatever words are used, however, the facts appear to point to a slowdown in commodity consumption in most big markets and that slowdown is pushing prices lower. Great news for wind and solar, and their previously soaring costs. Or is it?

Forecasts about copper demand have been extremely worrying for consumers and extremely upbeat for producers. The energy transition envisages such monstrous amounts of wind, solar, and EVs that a shortage — not just in copper — has become only a matter of time. Theoretically. Unless the transition cannot happen because of an economic slowdown. Welcome to the forecast trap.