Copper hits $11,000 per tonne for the first time, but…

Copper hits $11,000 per tonne for the first time, but…
Copper hits $11,000 per tonne for the first time, but…

(Agence Ecofin) – While it crossed the $9,000 mark last March, the price of copper continues its upward trend and sets a new historic record at more than $11,000/t. If long-term forecasts remain solid for the red metal, short-term developments are not yet unanimous.

The price of copper set a new record on Monday, May 20 at $11,460 per ton. The red metal is already doing significantly better than the peak of $9,500 predicted for the third quarter of 2023 by Macquarie analysts who also expected a price of $15,000 by 2025.

According to several consistent sources, the new jump in futures contracts on the red metal observed on Monday during the Monday session on the London Metal Exchange could be explained by several factors. These include optimistic forecasts for copper, developments such as BHP’s interest in Anglo American, concerns over supply difficulties and a forced liquidation of short positions on the New York market.

If the current upward trend in prices may suggest reaching the $15,000 threshold sooner than expected, several analysts are warning of speculative activities which also play an important role in the surge. Reuters discusses the role of speculation in current prices in a note published this week where the agency indicates that copper shipments from Chile and Peru are underway to cover short positions being liquidated on the New York market .

According to market experts cited by Bloomberg, copper prices could be overvalued, in particular due to still moderate demand in China (largest consumer), where stocks are still high. If fears regarding a possible short-term correction in copper prices are real, we must remember as indicated Ecofin Agency last March that the rise in copper prices in the medium and long term is still the consensus among analysts.

As a reminder, a report published on May 17 by the IEA suggests that the announced projects are sufficient to meet only 70% of copper needs in 2035 in a scenario where countries around the world achieve their national climate objectives. . For the IEA, nearly 800 billion dollars of investments in the extraction of critical resources would be necessary by 2040, including 492 billion dollars for copper alone, to stay on the trajectory of the global warming scenario. global climate of +1.5°C.

Read also:

05/20/2024 – The global market for critical minerals is expected to more than double by 2040, to $770 billion (report)

03/15/2024 – Copper returns to the $9,000 per tonne mark, its highest level in 11 months

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