Copper has entered its second bull market this century, say analysts
Potential for 'explosive price upside' over the next three years
Copper has entered its second secular bull market this century, Citigroup Inc. analysts say, as the metal traded near a 15-month high.
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Prices have risen more than 10 per cent this year as disruptions at major mines threaten refined metal production at the Chinese plants that account for more than half the world’s supply. The United States Federal Reserve’s expected pivot this year to easier monetary policy is also brightening the outlook for the global economy.
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Still, China is grappling with a prolonged property crisis and sagging consumer confidence. The country’s smelters, which produce more than half the world’s refined copper, are considering output cuts after processing fees fell near zero.
Only higher prices will solve these deficits
Citi analysts
“Copper’s second secular bull market this century is being driven by booming decarbonization-related demand growth,” the Citi analysts said in a note. “Only higher prices will solve these deficits.”
During copper’s bull market of the 2000s, prices rose more than fivefold in three years, driven by urbanization and industrialization in China. Citi recommends corporate consumers hedge their copper exposures, because there is potential for “explosive price upside” again over the next three years.
Prices briefly dipped in the London morning, before recovering, as LME data showed inventories jump by the most since September. Copper was up 0.4 per cent to US$9,449.00 a ton on the London Metal Exchange as of 11:04 a.m. in London, after prices hit US$9,484.50 a ton on Monday, the highest since January 2023.
Other base metals were higher, with zinc rising 1.4 per cent as Chinese output faces risks due to a collapse in treatment charges at smelters.
Bloomberg.com
