1/31/2024 0 Comments Oncor wire![]() 40% of copper supply comes from 2 countries (Peru and Chile) with unstable political regimes. I anticipate that to pair supply and demand is going to take a while. Copper supply has been flat at 20 million metric tons in 2018-2020 and has grown 2.5%-3.0% from 2021-2023. I expect a 10 million metric tons deficit in 2030 because supply will grow to 30.1 million metric tons at that time not coupling with my demand estimates of 40.4. I anticipate that the demand for copper in this environment will surge to a minimum of 10.1%.įigure 2: Garner November 2023 Supply Constraints Are Anticipated To Push Copper Prices Higher Projections for cloud growth are depicted in Figure 2. The cloud business has experienced a remarkable 20% growth in recent years, notably fueled by the introduction of Large Language Models (LLMs) in generative AI. One of WIRE's key clients is the Cloud infrastructure sector. This marks a substantial increase from its valuation of USD 58.5 billion in 2022, driven by a robust Compound Annual Growth Rate of 6.4% from 2023 to 2032. Global wind turbine market is expected to achieve a valuation of USD 107.1 billion by the year 2032. This could potentially reach up to 800 gigawatts (GW) annually as early as 2027. Considering the current total terawatt (TW) solar capacity, there's a prospective scenario where the world may achieve an annual installation rate of 1 terawatt of solar by the end of the decade. I estimate that solar and wind energy sources will drive copper demand to annual growth at 6.3%. ![]() electric vehicle charging market, with projections indicating a nearly tenfold increase by the year 2030. There is potential for exponential growth in the U.S. An EV requires 80% more copper than a regular car, presenting a challenge as companies like Tesla ( TSLA) seek alternatives to the metal. However, I believe the electric vehicle (EV) and charging market will exhibit even more substantial growth at an annual 7.2%. This structure requires extensive transmission infrastructure, including the utilization of undersea cables, to efficiently transmit electricity generated by offshore wind or solar installations. In contrast to fossil fuel and nuclear power plants, solar and wind projects are commonly situated several miles away from population centers. Within renewable energy, I expect grid transmission and electrical network distribution to experience significant annual growth at 4.6% until 2024, making it the largest market at 4 million metric cubic tons. Conversely, India is emerging as a production contender, with companies like Apple aiming to produce a third of iPhones in the country. However, uncertainties arise, particularly concerning China, which faces significant economic challenges especially in the construction sector, a copper-intensive industry. I anticipate that non-energy transition end markets to grow in line with the overall economy, at 3.2% annually. This, in my view, positions the market as an attractive long-term prospect for investors.įigure 1: Author based on "The Future of Copper", S&P Global Aligning with the study, I foresee steady growth until 2040, reflecting the global efforts toward renewable energy. The current interest rate future perspectives and following Powell's comments are expected to create favorable conditions for a brighter future in the sector. These estimates are primarily derived from 'The Future of Copper' study, with subsequent upward revisions after the GOP28 agreement on December 13th to "transition away from fossil fuels". My projections for copper demand indicate a compounding growth of 4.5% until 2040. Copper Demand Is Going To Boost In Coming Years With these factors in mind, Encore Wire stands out as a robust business poised to outperform the market. ![]() Anticipated increases in demand, driven by the shift to renewable energy sources and the expansion of AI and cloud computing, coupled with supply constraints, are expected to propel copper prices upward. In conclusion, I strongly recommend a buy for Encore Wire due to the highly favorable prospects of the copper industry. The assessment of its value will be conducted through the discounted cash flow method. I will elaborate on why it is one of the companies with a high short interest and explain into the inherent call option it holds on to copper prices. ![]() This article aims to explore the intricacies of Encore Wire's business model, shedding light on how emerging technologies like AI and renewable energy contribute to its growth. It's simple yet effective business model involves acquiring copper and transforming it into copper wire for various industries. Encore Wire ( NASDAQ: WIRE), though not extensively covered, operates in an industry that might not be as attention-grabbing as artificial Intelligence, renewable energy, electric vehicles, or solar power. ![]()
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