Commodities are making a roaring comeback, with copper leading the charge. The London Metal Exchange saw three-month copper reaching a peak of $9,640.50 per metric ton on Monday, its highest trade since June 2022. Analysts at Citi are now saying that anything below $9,500 per ton is considered cheap, with forecasts reaching an average of $10,000 in the fourth quarter of this year and $12,000 in 2026.
The surge in copper prices is being driven by a combination of factors, including supply constraints, a turn in the old manufacturing cycle, and a boom in copper-intensive energy transition sectors. The promise of a further demand boost from the rise of artificial intelligence and bigger data centers is adding fuel to the fire.
Investment funds have been quick to capitalize on the rising copper prices, with long positions reaching record levels on the London market. The enthusiasm for copper seems to be part of a broader investor rotation into commodities, with gold also experiencing a surge.
Despite some lukewarm short-term optics, with the European manufacturing sector still in a downturn and the Chinese import appetite showing signs of weakening, investors are banking on the long-term potential of copper. The future promise of copper’s role in energy-transition sectors and the potential for supply shortages are driving investment managers to place their bets on the red metal.
Analysts predict that copper is entering its second mega bull rally of the century, with the potential for prices to reach new record highs. Investment managers are expected to play a key role in driving this rally, making copper a hot commodity to watch in the coming months.
