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Copper price touched the highest levels ever on May 20. It crossed the $11,000 mark in intra-day trading. The metal has gained 35% this year.?
Copper is the third most used metal in the world, used in everything from homes to high-tech equipment. Growing copper demand is often taken as an indicator of a growing economy and industrial demand. Recently, brown metal has touched new highs as investors hope for macroeconomic growth, with expectations of interest rate cuts by the Fed and more stimulus from China at the top of the list.
What Happened to the Copper Market?
The use of copper has increased from 10 million metric tons in the 1980s to 26.5 million tons in 2023. Asia claims its largest share, i.e. 70%. In 2023, the total size of copper markets was 26.5 million metric tons (MT) and had a 162,000MT surplus in 2024.
But so far, the supply has been lower than expected. Expectations of a shortfall triggered by restrictions in iron ore supply have further added to the concerns, buoying the prices even further.
One of the biggest pushes has come from the Comex squeeze at the New York futures, which has resulted in investors rushing to secure copper contracts for July delivery.
Experts on Copper Price
Analysts at Morgan Stanley recently said that while we can expect volatility in copper prices moving forward there is still upside to it. They further highlighted that physical markets for copper show some tightening as inventories in the U.S. remain low.
As such, Morgan Stanley expects prices to touch $13,125 per ton as their bull case and a price of $10,500 per ton as a base case. Jeff Curries, former Goldman Sachs and chief strategy officer at Energy Pathways, declared copper as the new oil and is also bullish on the metal.
Citi bank echoes these sentiments saying that it has entered its second bull run as demand for decarbonization and energy transitions ramps up.
Bank of America has already warned of a copper supply crisis and expects prices to average around $10,750 per ton in 2025 going all the way to $12,000 per ton in 2026.
Many have also pinned their bullish expectations on the rising demand and pressure for greener energy, energy transitions, and the proliferation of negative emission technologies.
Trafigura has predicted that the rising use of AI and automation, along with widespread adoption of electric vehicles, can trigger an additional 10 million MT of demand by 2035.
Gaurav Sharma, energy market analyst, told Techopedia:
“Market sentiment seems to favor demand for copper in EV, renewables, and computing sectors offsetting the lag from construction. That has caused a pile-on of bullish bets on copper, propelling it to 12-year high prices on the LME. It also makes it difficult to call a top/ceiling in the current market atmosphere, and there is a real danger of overshooting prices.”
The World Economy Is Still Down
While the estimates point towards a highly bullish price trajectory, it is important to mention that the global economy still faces many downside pressures.
According to China’s Beige Book, in April, people were willing to travel but weren’t spending money. Consumer confidence is falling across worldwide.
There are also underlying issues in the U.S. economy. The recent PMI reading dropped below 50, indicating contraction. The global energy transition drive still has to find a proper hold, as 84% of the global primary energy mix still comes from fossil fuels.
