Copper Prices Have Risen 28% in the Past Three Months and Hit a Two-Year High

Published on: May 14, 2024
Author: Amy Liu

On Monday (local time May 13th), July copper (HGN24) (HG00)  rose by 10 cents, or 2.2%, to settle at $4.766 per pound on Comex, marking the highest close for the most active contract since April 18, 2022. Copper prices are approaching historical highs, with the previous record set at $4.9375 on March 4, 2022. As of Monday’s close, the most active copper futures have risen by 28.4% in the past three months. Last Friday, the most active copper futures closed at $4.66. Some analysts have warned that copper has entered overbought territory.

Senior market strategist at RJO Futures, John Caruso, mentioned that while he remains firmly optimistic about the price trend, he acknowledges that copper is currently in overbought territory. The Commodity Futures Trading Commission’s Commitments of Traders report is approaching a record net speculative long position of 69,000, down from 87,000 in 2021. A high level of speculative positions may serve as a counter indicator. Caution is advised.

An analyst at Pave Finance noted, “Copper prices have entered oversold territory. They are approaching historical highs. If prices remain range-bound without a significant decline, it could be a sign of consolidation before another round of rebound, which bodes well for the global economic outlook.”

However, should prices reverse from Friday’s peak, it would be a “warning sign that the economic conditions, potentially significantly slowed by credit tightening conditions, could be impacted. This could indicate a potential reversal in the stock market and a signal to allocate capital to 2-year government bonds… No alarms have been raised yet, but we are watching closely.”

Caruso also pointed out internal issues within the copper industry – copper treatment charges recently fell to negative values. This could lead to some companies closing down, or consolidation within the smelting industry, potentially incentivizing mining companies to produce more. If the market loses smelting demand, prices could take a hit. He remains bullish on copper prices. In the long term, the supply and demand dynamics for copper remain very favorable. Anticipated supply-side issues stem from prices not being sufficient to entice mining industry expansion, and the increase in electrification demand from artificial intelligence and electric vehicles is expected to boost future copper demand. These factors remain unchanged.

Base Metals Copper Electric Cars Mining