Copper's Card-Flipping Surge
Prices of copper reach two-year peak.
The price of copper futures is skyrocketing, ya'll! On May 13, come hell or high water, the July copper futures closed at a whopping $4,766 per pound on Comex, marking its highest point since April 18, 2022, folks. As I type this, at 12:40 PM Moscow time on May 14, those futures are freaking weighing in above the $4,800 mark. And lemme tell you something, the all-time high was a jaw-dropping $4,9375 per pound, set on March 4, 2022.
Copper's been on a helluva rollercoaster ride over the past two months, jumping up approximately 28%, according to MarketWatch.
In London, the three-month copper futures were trading higher than ever, wrapping up on May 13 at an impressive $10,185 per ton. And during the session, prices flirted with $10,200 per ton like it was nobody's business.
So, what's causing this copper craze?
Investors are betting their life savings that global copper ore supplies won't be able to keep the pace with increasing demand. Commodity traders are calling it like they see it, with a 1 million ton surge in copper demand expected by 2030 thanks to the development of AI and data centers. Oh, and a 35,000-ton deficit is coming at us in 2024, with global demand hitting 26 million tons. By 2025, the deficit is projected to balloon to 100,000 tons. Hold on to your hats, folks!
The Wall Street Journal's been all over this copper crisis, noting that this copper caper, combined with the skyrocketing prices for other commodities like gold, spells broad expectations for sustained economic growth and the potential for inflationary pressures. Copper's often used as an economic nibbler, thanks to its role in construction and electronics production.
Analysts at Pave Finance are waving their arms in the air about the resurgence of the global economy, mostly led by the US, and the anticipated recovery of China's economy. They're also gonna tell you that the greedy mofos driving the demand for copper are those who are after consistent inflationary pressure.
Moving on, here are some insights on the factors fueling the current copper price rally:
- Supply Struggles: The copper market is choking on structural supply shortages. Mining output can't keep up with the growing demand, particularly from the renewable energy and electric vehicle sectors. Analysts like Kostas Bintas say the global copper market is "caught in a vice" [Greek Slang for "experiencing tightness"].
- Tariff Time Bomb: The possibility of U.S. tariffs could lead to increased imports and speculative buying, creating price volatility and propping up higher prices. This uncertainty's also widened the gap in prices between different exchanges.
- Investor Obsession: Strong investor interest, as shown by the performance of copper-related ETFs like the Global X Copper Miners ETF, has been a significant factor maintaining upward pressure on copper prices.
- Green Energy Gamble: The increasing demand for copper due to the green energy transition is supporting price growth.
As for the projected copper demand by 2030, there isn't a specific number in the search results, but it's safe to say there's agreement on growth. For instance, by 2025, copper demand is expected to grow by around 3.5% to reach 28 million metric tons. This trend's likely to continue beyond 2025, thanks to ongoing infrastructure development and the green energy transition.
Last but not least, here are some potential inflationary pressures related to copper:
- Supply Chain Squeezes: Tariffs and supply constraints could potentially disrupt supply chains, leading to higher costs for downstream products that rely on copper, which might generate inflationary pressures.
- Renewable Energy and Infrastructure Costs: The growing demand for copper for renewable energy projects and infrastructure could inflate project costs, potentially contributing to broad inflation if these costs are passed on to consumers.
- Speculative Mayhem: Market volatility driven by speculative activity could affect commodity prices, including copper, potentially influencing inflation through the cost of raw materials in various industries.
- The surge in the price of copper futures on May 13, reaching $4,766 per pound, marks the highest point since April 18, 2022, and is primarily driven by investors believing that global copper ore supplies won't meet increasing demand, especially due to the development of AI and data centers.
- The resurgence of the global economy, particularly led by the US, and the anticipated recovery of China's economy, as pointed out by analysts at Pave Finance, are significant factors contributing to the current copper price rally.
- The global copper market is suffering from structural supply shortages, with mining output struggling to keep up with growing demand, particularly from the renewable energy and electric vehicle sectors, according to analyst Kostas Bintas.
- Strong investor interest, as evidenced by the performance of copper-related ETFs like the Global X Copper Miners ETF, is maintaining upward pressure on copper prices.
- The green energy transition is supporting price growth for copper, as the increasing demand for this metal in renewable energy projects could potentially contribute to broader inflation if project costs are passed on to consumers.
