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A week ago, July copper prices touched historical intraday levels slightly below $5.20 per pound or $11,460 per ton on the Chicago Mercantile Exchange. On Tuesday (May 28th), July copper fell to $4.85 per pound ($10,690 per ton).
As cargoes from Chile and Peru shifted to North America after the Chinese import arbitrage, copper futures trading volumes have returned to levels seen before the frenzy. A new report from the Australian bank Macquarie indicates that adjustments in copper prices will persist, forecasting an average price of $9,800 for the September quarter.
Commodity strategist Alice Fox from London and analysts at Macquarie in London, Singapore, Shanghai, and Delhi suggest that copper prices should exceed $10,000 by the end of the year. Despite an upward revision in the report, Macquarie still sees the long-term price for copper around $9,000.
For investors who find trading copper futures as entertaining as going to the movies or playing a game, the Macquarie report at least provides them with a target: “Essentially, at $9,000 per ton, it is an equilibrium price, given that the copper market is rarely in equilibrium; during tight periods, copper prices could rise significantly, while during weak periods, copper prices could remain lower than expected.”
Macquarie does acknowledge that uncertainties surrounding the future of the Cobre Panama could have a significant impact on market balance. Whether due to artificial intelligence, military demand, or the Cobre Panama, Macquarie’s outlook on copper is far from super-cyclical in the long run. The energy transition is overtaking China’s urbanization and industrialization as the primary driver of global demand growth, but this does not necessarily mean an accelerated overall demand for copper.
