US Copper Futures Soar To Record Highs

• Copper futures hit a new all-time high
• Renewable energy, electric cars, and AI bolster copper’s demand outlook
• The outlook for copper looks promising

Copper futures hit a new all-time high

Copper soared to a new record high, continuing a months-long rally fueled by financial investors who have entered the market expecting supply shortages.

Copper prices have been soaring since the beginning of this year, rising by 29% year-to-date. Copper futures at COMEX traded at $5 per pound as of 15 May, marking the highest level since March 2022, when the base metal's price reached an all-time high.

The global copper market is experiencing significant turmoil due to a substantial squeeze in the New York market, where prices hit an all-time high last week.

The short squeeze caused prices on the Comex exchange to reach an unprecedented premium over the LME, prompting a scramble to redirect metal supplies to the US.

Renewable energy, electric cars, and AI bolster copper’s demand outlook

Copper prices have surged recently due to increasing optimism regarding lower interest rates and stimulus measures from top importer China. Additionally, expectations of tighter supplies, resulting from production cuts in China and stricter sanctions on Russian metal exports, have driven buying interest in copper.

This surge in copper prices is primarily driven by its crucial role in growing industries, including electronic vehicles and AI chip manufacturing. This growing demand is particularly pronounced in China, whose economy is still regaining momentum in these key industries. Demand is outpacing new supply for now, furthering the rapid rise in futures prices.

The Chinese market is expected to see inventories withdrawal soon with exports rising," Gong Ming, an analyst with Jinrui Futures Co, said to Bloomberg.

Outlook for copper looks promising

According to S&P Global: "Copper prices are anticipated to ascend in the long term as a result of the clean energy transition, notwithstanding prevailing short-term apprehensions." The organization forecasts that copper demand will double, reaching 50 million metric tons by 2035. The most significant demands are expected to emanate from the US, China, Europe, and India.

According to Statista, total copper mine production amounted to approximately 22 million metric tons in 2023, up from 16 million metric tons in 2010. Projected growth suggests that worldwide production will reach 30 million metric tons by 2036, assuming production continues at the same pace. However, this projected increase falls significantly short of the anticipated surge in demand.

• Copper futures hit a new all-time high
• Renewable energy, electric cars, and AI bolster copper’s demand outlook
• The outlook for copper looks promising

Copper futures hit a new all-time high

Copper soared to a new record high, continuing a months-long rally fueled by financial investors who have entered the market expecting supply shortages.

Copper prices have been soaring since the beginning of this year, rising by 29% year-to-date. Copper futures at COMEX traded at $5 per pound as of 15 May, marking the highest level since March 2022, when the base metal's price reached an all-time high.

The global copper market is experiencing significant turmoil due to a substantial squeeze in the New York market, where prices hit an all-time high last week.

The short squeeze caused prices on the Comex exchange to reach an unprecedented premium over the LME, prompting a scramble to redirect metal supplies to the US.

Renewable energy, electric cars, and AI bolster copper’s demand outlook

Copper prices have surged recently due to increasing optimism regarding lower interest rates and stimulus measures from top importer China. Additionally, expectations of tighter supplies, resulting from production cuts in China and stricter sanctions on Russian metal exports, have driven buying interest in copper.

This surge in copper prices is primarily driven by its crucial role in growing industries, including electronic vehicles and AI chip manufacturing. This growing demand is particularly pronounced in China, whose economy is still regaining momentum in these key industries. Demand is outpacing new supply for now, furthering the rapid rise in futures prices.

The Chinese market is expected to see inventories withdrawal soon with exports rising," Gong Ming, an analyst with Jinrui Futures Co, said to Bloomberg.

Outlook for copper looks promising

According to S&P Global: "Copper prices are anticipated to ascend in the long term as a result of the clean energy transition, notwithstanding prevailing short-term apprehensions." The organization forecasts that copper demand will double, reaching 50 million metric tons by 2035. The most significant demands are expected to emanate from the US, China, Europe, and India.

According to Statista, total copper mine production amounted to approximately 22 million metric tons in 2023, up from 16 million metric tons in 2010. Projected growth suggests that worldwide production will reach 30 million metric tons by 2036, assuming production continues at the same pace. However, this projected increase falls significantly short of the anticipated surge in demand.

Source: FT – Data from US Commodity Futures Trading Commission, Wood Mackenzie

Meanwhile, the copper mining industry is set for a slowdown in the upcoming year. A report by Goldman Sachs indicated that investment in mining companies in 2022 was nearly 50% lower than the expenditure in 2010. Disruptions in copper mines, often occurring in Latin America, could result in a widening deficit in copper supply from 2024 onwards.