On Thursday, copper prices took a nosedive, plummeting to $10,210 per tonne, marking an 8% decrease from its record high earlier in the week. Many market participants had anticipated this decline, feeling that the initial surge in prices was unsustainable. Some blamed hedge funds and financial investors for inflating the price beyond its true value.
“I think that the copper price is wildly overinflated. There is so much tourist money it’s insane. Hedge funds have rolled into coffee, rolled into cocoa and now into copper. Maybe they’ll roll into cobalt next if it has to start with a ‘c’,” a trader source revealed.
The trend of dramatic price fluctuations was not limited to copper, as coffee and cocoa prices also experienced sharp increases and subsequent declines due to fund activity. Analysts noted that the current downward trend in copper prices seemed to be a result of profit-taking.
“Profit-taking has accelerated in the copper market amid the risk-off tone across markets,” ANZ commodities strategist Daniel Hynes commented.
While some sources expressed concern that the price surge was unsustainable, others believed that despite the recent drop, copper’s tight supplies and increasing demand meant that its fundamentals could still support stronger prices.
Despite the significant drop in prices, copper remains 22% higher than it was at the beginning of the year. The rollercoaster ride of copper prices serves as a stark reminder of the volatile nature of commodity markets and the influence of various external factors on pricing trends.
