The remarkable upward trajectory that has propelled copper prices to the brink of reaching the significant $10,000 per metric ton threshold is anticipated to be sustained, fueled by emerging shortages in the coming months.
Recent gains in copper prices have been underpinned by expectations of constrained supplies and positive outlooks for demand, particularly stemming from applications in energy transition such as electric vehicles, as well as advancements in technologies like artificial intelligence and automation. Additionally, a resurgence in manufacturing activity, notably in leading consumer China, where surveys of purchasing managers indicate expansion, has further contributed to the buoyancy of the copper market. This surge in enthusiasm for copper recently culminated in a two-year peak at $9,988 per ton, marking a substantial 25% increase since early October.
Last year, the closure of Canadian miner First Quantum’s Cobre mine in Panama raised concerns about potential shortages of copper concentrate, a vital feedstock for metal production, further bolstering copper prices. Analysts, such as Piotr Ortonowski from Benchmark Mineral Intelligence, emphasized the impact of supply disruptions and the turning of the industrial cycle, highlighting the enduring demand narrative driven by long-term energy transition prospects against a backdrop of inadequate investment in new mine supply.
The recent gains in copper prices have also been influenced by the reversal of short positions, reflecting bets on lower prices, particularly during a period of subdued Chinese demand due to shrinking manufacturing activity. As prices surged rapidly in recent weeks, industry experts anticipate a potential correction in the near future, even as copper prices on the London Metal Exchange (LME) currently hover around $9,644 per ton.
Furthermore, interest rate cuts in the United States, Europe, and other regions are seen as potential drivers for growth and demand within the copper market. Industry sources predict that tight supplies will soon manifest in draws on stocks in LME approved warehouses and those monitored by the Shanghai Futures Exchange.
Jay Tatum, a portfolio manager at Valent Asset Management, emphasized that copper metal scarcity will be the ultimate test of whether copper prices can be sustained and continue to rise, marking a transition from an investment story to tangible delivery on promises, including rising copper intensity across the economy, supply challenges, concentrate tightness, and restocking effects following a prolonged manufacturing slowdown.