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00:00Jeff I think the million dollar question is do you prefer commodities such as iron ore or do you want commodities such as copper that are really essential also for the decarbonization of our societies. We would argue obviously copper is the one you want to. We'd like to say copper is the new oil. It's the strategically most important commodity because if you're going to electrify the world if copper conducts electricity better than any other element which means that it is now the new oil and it's going to provide you with your energy. However I'm going to go back to the iron ore and what's going on there. Just remember I said before that commodities depend upon the level of demand not the growth rate. And part of the reason for that to be bullish a commodity is the level of demand versus the level of supply. When the level of demands about a level supply you're bullish. The growth rate on steel demand in China is down. Let me repeat that. Down 7 percent. The reason why it's bullish is that because of issues around emissions they have cut supply such that demand is down but supply is down more which has created that bullish dynamic. So this is one of those inflationary impacts of dealing with decarbonisation. But Jeffrey if you look at the copper market what's already priced in and safe. If this is the thing that's needed right the new oil is the market prepared for that or is there going to be a shortage. Absolutely not. Now it's sleepwalking into this kind of like oil did in the 2000s. In fact the setup here for copper in this supercycle environment is almost identical to that for oil in let's say 2002. We've seen a sharp rise in prices yet there is no green cap ex no maintenance cap ex. People are not concerned about the future. And I think part of that is is because when we look at the current management in many of these commodity companies what do they remember is that their predecessors were focused on growth and doing that they had too much supply going into that downturn in 2016 and got crushed. This group is focused on return to shareholders a return on equity. And as a result we're not seeing whether it fits in oil copper or whatever these different markets or even in grains. We're not seeing a supply response to these higher prices. It's even the case for shale in the US. So are they prepared. Absolutely not. And we start to look out 5 7 years. The deficit becomes unprecedented and it becomes a market you know 8 million tonne deficit which means you're going to have to increase scrap. You're going to have to do substitution of wave into like aluminum and other types of metals that can conduct electricity. And you're going to have to scrape to the bottom of barrel of mining to be able to increase supply. I think the difference between copper today and oil let's say two decades ago at least in oil we knew shale was out there. Prices just had to get high enough to do it in copper where there is no shale. We don't know of any type of technology that can solve this problem. We used to call Jeff this metal Dr. Copper because it had a D in Chinese economics. Is that still the case. Does it matter so much what happens in China. Do we need to be following you know Biden's XI incredibly closely if we want to trade this metal. Great question. In fact I've been doing this long enough that Dr. Copper had his Ph.D. from Harvard three thousand and two because they used to tell you what was going on in terms of the economy in the United States which I think is critical here because it's the most cyclical of all assets because it goes into home building infrastructure development all of it. And then after 2002 as you started to see once China joined the WTO you had a huge call it outsourcing arbitrage opened up where to shift at all those activities to China. At that point Dr. Copper got us from Peking University in China today. It's a very different story. We're seeing a much more balanced growth between U.S. Europe and China in fact this year alone. We expect U.S. and European growth in copper to be running around 8 percent in that in China to be running around 5 percent. So we're in a new world where hey it's a global pace. It's all I can say. Now he has his P HD some middle and high schools call it Oxford or Cambridge.

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Copper Is the New Oil, Says Goldman’s Currie

Jeffrey Currie, global head of commodities at Goldman Sachs, explains why copper is the commodity that investors want to own in the current market on “Bloomberg Surveillance Early Edition.” (Source: Bloomberg)