Copper prices continue to ratchet higher as the tightness in the market that’s been predicted for years begins to bite.
I’ve been writing for years that copper is the simplest investment thesis anywhere and it continues to play out according to the script. There simply isn’t enough to meet the coming demand for AI and energy. Moreover, it takes over a decade to build a mine and the pipeline is increasingly dry. That means that any supply shortages can only be fixed by higher prices and — eventually — substitution with aluminum in low-value uses.
Front month US copper is trading at $6.65 today, which is within striking distance of last month’s record high.
It’s worth noting that there is a premium in US copper due to US tariffs policies. In London, three-month copper is at $13,600/tonne so that puts the premium at about 6%. The US will decide on tariffs on copper imports at the end of July and there is some front-running of it.
Citi has flipped bullish on copper and now says that uncertainty over US tariffs and hopes that the Strait of Hormuz will reopen by summer will push copper prices higher. They see $15,000/tonne within a year.
“We
anticipate further strategic ambiguity from US policymakers rather than
a definitive announcement of a tariff and believe that the
administration will not impose a refined copper tariff but will avoid
stating this definitively to maximize incentives to maintain excess
copper inventory in the US,” Citi analysts wrote.
Goldman Sachs on Monday raised their year-end copper price target to $13,735 per metric ton from $12,465 previously.
At the dawn of the Iran war, there were fears that high oil prices and angst would lead to decreased demand for copper but that hasn’t happened yet.
A risk for copper at the moment is sulphur, with a large part of global supplies shipped through Hormuz and currently blocked. It’s critical in producing copper and without it, prices are rapidly rising and could eventually slow mine production.
Morgan Stanley also sees $15,000 copper:
“Copper is already trading near all-time highs, and net longs on COMEX are at a record level. However, with supply disruptions rising, US imports expected to stay strong for now and signs that China is restocking on dips, any pullbacks in copper are likely to be short-lived in our view. The US tariff decision remains key, but the current COMEX-LME spread should be attracting metal. A decision to raise tariffs could accelerate the move higher.”
I’ve long said that copper miners are the best way to bet on copper and the COPX miner ETF is up 3.4% today and pushing towards the top of the range.
This article was written by Adam Button at investinglive.com.
