Explore the monthly market wrap-up, a summary of the key trends, emerging players and market movements.

Key market movements that caught our attention in May:

Antimony the critical mineral you've never heard of

Antimony prices have soared this year due to tightening supply and increasing demand. This critical mineral, though not widely discussed, is essential for manufacturing lithium-ion batteries, solar panels, wind turbines, and arms and ammunition. The growing demand for antimony in military applications, driven by wars and geopolitical tensions, is likely to lead to increased control and stockpiling of the ore. In 2023, the antimony market reached US$ 2.1 billion, and the IMARC Group projects it will grow to US$ 3.6 billion by 2032, with a growth rate of 5.8% from 2024 to 2032. As of the end of May, antimony prices have risen 54% to US$17,588 per metric ton. This surge is primarily due to significant decreases in supply from major producers China and Russia, leading to a shortage. Chinese smelters, operating at reduced capacity, are now seeking antimony ore from other producers. Additionally, sanctions imposed on Russia have further reduced supply, deepening the deficit. Australia's production of antimony is minimal, with only one operating mine producing 1.8kt, approximately 1% of the global supply. However, there is significant potential for increased production in Australia to meet the rising global demand driven by the shift to renewable energy sources. 

BHP and the outlook for its target: Copper

BHP's recent bid for Anglo American, although unsuccessful, sets the stage for numerous copper-related acquisitions. BHP is one of the world's largest copper producers, producing 1.7 thousand tons of copper in FY23. The attempted takeover of Anglo American, a significant copper producer, was labelled a ‘win-win’ for both sets of shareholders by BHP CEO Mike Henry. Targeting Anglo American's copper assets, BHP set its sights on becoming the largest copper producer in the world. It is clear why copper is at the forefront of Mike Henry's mind. Copper prices recently surged, trading at US$5 per pound at one point, a new record high. Copper has risen just under 20% year to date, as the transition towards green energy, the rise of electric cars, and the AI boom have all contributed to a surge in demand for copper. Although recent price spikes can be attributed to measures taken in China to stimulate the economy, in the long term, undersupply will drive the price higher. The anticipated demand for copper is projected to be around 50 million tons in 2035, while supply is expected to grow to 30 million tons by 2036, leaving a significant gap in the market. Therefore, existing copper mines are going to be hot property in the coming years. Copper mines usually take approximately 16 years to start up, according to S&P Global. With copper demand increasing, this is not a viable option for some, leading to the alternative solution of acquiring existing mines. There are many ASX-listed copper producers that may see some action from bigger copper players.

Data centres and the power they require

Artificial Intelligence is being rapidly deployed across industries worldwide, leading to substantial power consumption driven by data centres. A data centre is a physical facility that houses IT infrastructure essential for building, running, and delivering applications and services, as well as storing and managing the associated data. The swift expansion of AI has increased the demand for energy-intensive graphic processing units (GPUs). Due to their high energy requirements, data centres must have a constant power supply. According to the International Energy Agency (IEA), data centre electricity usage is expected to double by 2026. To mitigate carbon footprints, companies are increasingly ensuring that their data centres are powered by renewable energy sources. Some "Green Data Centers" are specifically designed to minimise their carbon footprint by utilising renewable energy sources like solar and wind power, along with efficient cooling and responsible waste management practices. The growth of these green data centres highlights the potential for developing corresponding renewable energy sources. However, concerns arise over the reliability of wind and solar power, as their intermittent nature may not consistently meet the large, constant power demands of data centres. As the demand for data centres continues to rise, ensuring reliable power generation remains crucial to their success.

Will's May market comments:

"In May, U.S. 10-year Treasury yields fell nearly 8% or 35 basis points but then reversed, ending the month only 16 basis points lower. Additionally, the 3-month SOFR December 2024 futures ended May at $95.03, signalling just over one rate cut this year. Data in the latter half of May aligned with inflation expectations. On the other hand, Australian CPI came in above expectations, denting the RBA's hopes of a rate cut this year. The outlook for rate cuts in Australia is fading, while the possibility of a hike enters the conversation, depending on upcoming data."

- William Smith, Dealers Assistant, BPC Wealth Management