As the annual copper industry event CESCO Week ended this week, the price of this leading metal has been hitting new highs over the past two years. During Friday’s US trading session, copper for May delivery reached an intraday high of $4.51 per pound or $9,942 per ton, marking an increase of over 16% since the beginning of 2024 (with most of the surge occurring in April), reaching the highest point since early June 2022.
In recent weeks, the establishment of long positions by so-called managed money (i.e., betting on future price increases) has led to a record of over 2 million tons of long positions on the London Metal Exchange. Similarly, the long positions for copper futures contracts on the Chicago Mercantile Exchange (CME) have reached levels not seen since January 2018.
In a research report on the Santiago CESCO Week conference, released on Friday (April 19th local time), financial services company BMO Capital Markets summarized the conference atmosphere as “active but not bullish on copper prices.”
While most market participants have been pleased with the recent rise in copper prices over the past month, it is widely believed that this upturn has slightly exceeded the fundamentals. BMO stated, ” In our view, this reflects the heavy inflows towards copper, and commodities as an asset class, a dynamic that many producers were keen to understand more about. Some believe that demand will further improve to support current price levels, but if this does not materialize quickly, the recent upward trend may prove fragile.”
Conversely, several senior traders with decades of experience have recently indicated that the market for semi-processed copper ore (i.e., concentrates) has never been as tight as it is now. This has stimulated bullish investors and driven prices to the highest levels in nearly two years.
Analysts at CRU Group have expressed confidence in the uptrend of copper prices, stating, “Copper prices are coiled like a spring, and I am very confident about the rise in copper prices. This is a direct consequence of the impact of raw material shortages.”
Max Layton, head of commodity research at Citigroup, recently stated in a report to clients, “We believe that the second long-term bull market for copper in this century is gaining ground.” He anticipates an average copper price of $10,000 per ton in the last three months of 2024, rising to $12,000 per ton in 2026.
