Spectacular copper price rally only gaining momentum

The recent surge in copper prices continues to gain momentum, signaling a potential for further growth in the market. This rally is driven by various factors, including increased demand for copper in industries such as electronics, renewable energy, and infrastructure.

As the annual copper industry gathering concluded this week, attendees departing from Chile’s capital are witnessing the bellwether metal nearing two-year highs.

During US trading on Friday, copper futures for delivery in May reached an intraday peak of $4.51 per pound or $9,942 per tonne. This marks an increase of over 16% since the beginning of 2024, with much of the surge occurring in April, and represents the highest level since June 2022. The remarkable upward trend in recent weeks is attributed to a significant buildup of long positions by managed money, surpassing 2 million tonnes on the London Metal Exchange—a new record. Similarly, long positions on Chicago’s CME copper futures contracts have reached levels not seen since January 2018.

BMO Capital Markets, in its research note on CESCO Copper Week in Santiago, described the atmosphere at the conference as “Buoyant but not bullish.” There was a consensus among attendees that while many were pleased with the recent spike in copper prices, the rally may have outpaced underlying fundamentals.

According to analysts, the surge is driven by substantial inflows into copper and commodities as an asset class. Although there is optimism that demand could further support current price levels, the absence of such developments in the near term could leave the recent rally exposed to vulnerabilities.