Jeff Currie Talks Aluminum and Copper Prices

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Carlisle, chief strategy Officer of Energy Pathways, Jeff Curry, let's go to alex right now. Hey, Paul, thanks lot, really appreciate it. Jeff, I've been asking CEOs for the last day and a half, what do you do with twenty five percent tariffs? And now it's going to be what do you do with fifty percent tariffs?

What's going to.

Happen to the market.

Well, it's pricing it in, you know, cut coppers, you know, heading towards five dollars a pound right now. But I think aluminum is the one to really watch because the question is can you on shore aluminum production and the answer is absolutely not.

You know, if you think data centers and.

AI are power intensive, aluminum smelting is in a whole different world. It's six times more power intensive per dollar revenue than AI data centers.

So if you're already power constrained, there's.

No possible way you're going to bring all of this aluminum smelting into the United States.

So where do we get most of our aluminum and steel that the refined products, Well, a.

Lot of it comes from the hydro electric power up in Quebec, so it comes down into the US from that.

So shutting down that cheap source.

Of aluminum supply and trying to replace it with really expensive produced, domestically produced supply, I think it's going to be a tall ordered ask.

It's been a tough commodity road in the last couple of weeks. And we did with this molatility right oil was it a six month low? That's on recession fears, tear fears, growth fears, et cetera. What kind of cycle are we in right now?

Well, I think what we're going through is a huge shift in the global order around security. And I think, you know, what is the response that probably Ontario is going to do to these tariffs. They're probably going to cut power. The governor's already threatened he's going to do it. He cuts power into the US. Energy security is top of mind, and I think that's what's going on right now,

Okay, so what does that look like? Because what's so interesting about commodities is it will always clear it a price, right, you'll always buy something, It just depends on what price you'll buy it.

Is that still true? Absolutely?

And I think what we're going to start to see is that's what's going on with aluminum and copper today. Is there going to price in a security premium to make sure you have that supply in your country domestically protected, in duty paid. You're seeing it in gold, and you're seeing it across the metal space and then particularly an energy. We're beginning to see that and I think that that is going to be the primary driver of the you know, let's call it the new cycle and commodities.

So it's not geopolitical risk, it's not a green premium, it's a security premium. Correct, you're going to pay up to produce this.

Stuff at home? Yep, exactly.

That that's a humongous shift.

It was huge, huge, and it's going to be really difficult to do, you know, whether or not.

And I think the argument we take.

Is it's going to be a diversified set of energies. That's why we call it the new jewel Order, is because you're gonna want oil and gas. You're gonna want renewables, nuclear, You're gonna want everything. And you want to diversify yourself because if you lose one of those supplies, you want to be diversified so that you can deal with that

Evolution of peak oil.

It started out peak supply, we're gonna run out of supply, and then peak demand. We got too much of the stuff, so we need to reduce you know, the emissions.

And now it's peak trade, meaning I can't get my hands on it.

So it's gonna be really interesting then is if we get a piece in the Ukraine War, what happens with Germ in Europe and buying Russian.

Gas, they're going to be hesitant. They'll probably take a little bit. Yeah, they're still buying it, but they're going to diversify their sources. And I think that's the key message here is diversify your sources so you're not so dependent on one supplier one type of energy. And I like to point out what is the best selling car out there, a PHEV, a plug in hybrid. Why because it operates off oil, gas, solar, wind, nuclear, the entire gambit of.

All the energy sources.

And I think that that type of diversity is going to be key in this new jewel order.

Okay, so if I'm looking at prices in general, like does the band move up prices become more volatile? Do they move down? Like if I'm looking at say oil or copper, what's my trading band.

I think that the volatility is going to explode across all these markets. You're already seeing it in power and the metals and across the space. That's going to lead to a higher average price. By the way, the volatility then discourages the ms MA.

I don't want to invest in this thing is too volatile.

Lower investment creates more volatility, and it just feeds off of itself.

You're one of the first to invent the word supercycle, right, I mean, have big supercycles. There's big ups, there's big downs, and there's an investment cycle that goes with it.

Are we no longer in that, you know? I think that's a great question. And those supercycles.

Before were created by demand pull creating big shortages, created these big trends that created that supercycle.

This one's a malinvestment cycle.

It's industrial policy push, which creates pockets of imbalances. I like to call that cyc a bubbling cauldron, a little mini supercycles everywhere, and you get these high volatility and that's what we're seeing.

By the way, the opportunity for investors in this environment is phenomenal.

In fact, one of the themes going around here in Seer Week is the oil market. These markets are micro bullish, but macro bearish, so that micro creates these little opportunities inside there that you can take advantage of.

But you don't get that big upward trend.

And I think this bubbling cauldron of a little supply and demand imbalance is probably the best way to descrive change the.

Time horizon for investments or the return for those investments.

When we think about long term investments, it's going to provide a very similar return, but you got to manage that risk. And I think that that's the real the message here we think about you know, the focus before was on levelized cost of energy, get.

The l c OE down. We got it down, but we were unable to deliver the jewels. So you think about Germany.

It got it's levelized cost down, but it could only produce the power when the wind blew or the sunshine. Now the focus is on that delivered jewel. You can think about Now the focus is on Roe instead of l c OE. And so our other way to say it is dispatched power that goes to the consumers opposed to a centralized production of power.

Okay, fascinating. One more quick question, because you're you and it's an oil conference. What's the lowest price of oil you think we're going to see this year and what's the highest?

Totally any bad question.

I think that's a great question because about this drill, baby drill, we're sitting on the bottom of the cost structure. You already see it drillings coming off. You know, you know all the OPEC countries are under pressure. Yeah, maybe you can get down into the low sixties or something like that.

I would argue, you know, the markets to the upside, you know, looking at the amount of investment out there.

Inventories are low, by the way, and now you put the security premium, people are going to be scrambling to get the barrels bringing in and I think that that's going to be going to be the key message.

Jeff, always a pleasure love chatting with you is always going to count w at Sarah as well. Jeff Curray Carlisle, Chief Strategy Officer of Energy Pathways