Copper Prices Surge to Highest Level Since June 2022
In a surprising turn of events, copper prices have continued to soar, hitting their highest level since June 2022. Investors are betting on the fact that the curtailed ore supply will struggle to keep up with the increasing global demand. This surge comes after a mine-supply shock late last year that has combined with better-than-expected consumption, particularly as global manufacturing usage picks up.
Futures on the London Metal Exchange have increased over 11% this year, with copper jumping as much as 2.7% to $9,590.50 a ton on Friday alone. This surge comes after fresh data showing strong Chinese imports during March. Analysts are attributing this positive trend to a combination of factors, including a challenged supply perspective, cyclical improvements in global growth, and a pivot into commodities as a hedge against inflation fears.
Hedge funds have increased their net long positions in copper to the highest levels since February 2021, indicating strong bullish sentiment in the market. Chinese trade data show that imports of refined copper in the first quarter are up nearly 7% from the previous year, despite the country expanding its domestic smelting capacity.
As supply squeezes continue to impact the industry, smelters are under increasing pressure. The sudden shutdown of major mines, including First Quantum Minerals Ltd.’s Cobre Panama mine and Anglo American Plc’s scaling back of production, has tightened the outlook for mined copper even further.
While the market remains optimistic about the future of copper prices, potential headwinds include a buildup in refined copper stocks in China and spot prices trading at a discount to futures. Overall, the surge in copper prices coincides with a wider commodities bull run, with gold trading at a record high and oil potentially hitting $100 a barrel.
