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Copper prices have recently seen an incredible surge, rising nearly 45 per cent since the covid lockdown. Following all-time lows during global covid restrictions in 2020, the price of Copper has now returned to and surpassed historic highs. Copper prices are expected to continue rising as worldwide economic activity improves, and the increased use of Copper in the global economy raises demand concerns.
The unexpected rise in Copper prices is intriguing because Copper and Gold prices typically move in opposite directions. Copper usage has more than doubled recently in developing economies such as China, the United States, Europe, Japan, and India. With the digitization of the global market, the rise of the electric car, and the energy transition, the Copper price is expected to rise further. That is why it is surprising that Copper and Gold prices have been rising in lockstep recently.
MCX Copper prices hit record highs of Rs.871/KG in March, and CME Copper prices touched around $5 per pound. In March, MCX copper prices reached an all-time high of Rs.871/KG, while CME copper prices hovered around $5 per pound. Will Copper prices fall, or will they continue to rise?
At the time of writing, Copper prices are trading at,
MCX Copper Prices (INDIA): Rs.703.50/KG
COMEX Copper Prices (US): 3.87 USD/Lbs
SHME Copper Prices (China): 68490 Yuan/Ton
Yard Copper Prices (Australia): 9.93 AUD/KG
JPX Copper Prices (Japan): 1081.92 Yen/KG
Frankfurt Copper Prices (Germany): 8604.01 EURO/KG
Also, Copper Scrap prices hit higher levels and are now trading at,
No.1 Copper Scrap Prices (US): 3.12 USD/Lbs
No.1 Copper Scrap Prices (Canada): 4.22 CAD/Lbs
Copper Cable Scrap Prices (Mumbai): Rs.680/KG
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Is "Copper - The New Gold of the 21st Century"? – Why?
Copper has become the new "Gold." Driven by its wider use in clean energy technologies, Copper prices have doubled; typically, "Copper Base Metal" is regarded as a leading indicator of economic health; an increase in Copper demand typically indicates a growing economy, whereas a decrease indicates an impending economic slowdown.
According to Bank of America, Copper prices could double again by 2025, as metal has become extremely valuable. Let us analyze how other investors feel about Copper prices.
Investors' Sentiment About Higher Copper Prices
Bank of America commodity strategist Michael Widmer Widmer said Copper might spike to $13,000/t in the coming years after recently notching $10,000 for the first time in a decade.
David Neuhauser, founder and managing director of US hedge fund Livermore Partners, told CNBC that Copper is "the new oil."
Alisher Usmanov, one of Russia's richest businessmen, said by 2040, the demand for Copper will grow by 2.7 times, while this metal will be crucial for renewable energy technologies. "Copper is often referred to as the 'new gold', 'new oil' or even' metal of the future because of its important role in low-carbon economies and high-tech industries."
Goldman Sachs says that Copper is 'the new oil' and could reach $15,000 by 2025 as the world transitions to clean energy.
Here are the Copper price forecasts issued by the leading international agencies:
• The World Bank estimated in its commodity forecast report that the spot price for Copper will average $8,500 per metric ton by the end of 2021. The price is expected to decrease to $7,500 in 2022 and then grow to $8,250 by 2035.
• The IMF projects the growth of the copper price from an average of $6,174 per metric ton in 2020 to $8,313 in 2021, followed by a gradual decline to $7,600 per metric ton by 2026.
• The Department of Industry, Science, Energy, and Resources of Australia also expects the price of Copper to rise sharply to $8,257 in 2021, with a slight decrease to $7,724 in the following two years, consequent growth to $8,876 by 2026.
Copper Future Price Overview in 2022. Have Copper Prices Bottomed Out?
Copper prices faced a bearish trend in the first three quarters of 2022, hitting nearly 20-month lows in the CME futures because of poor economic activities in the major economies, primarily in "China."
The Copper price growth over the past year was driven primarily by the high demand from China, the world's top copper consumer. China consumes around 40% of the world's copper output, or around 8 million tonnes. Because of Covid curbs in China since the second quarter of 2022, the base metals import volume was largely impacted by weakened manufacturing activities.
Furthermore, the country is dealing with an ongoing energy crisis, which has resulted in strict energy rationing, particularly in the manufacturing industry. For months, the energy crisis and higher energy costs have resulted in industry disruptions, resulting in lower Copper demand and, as a result, lower Copper prices.
On the other hand, Unwrought Copper and Copper product imports into China totalled 509,954.1 tonnes in September, including anode, refined, alloy, and semi-finished Copper products. Copper imports in September increased by 2.4% over the previous month's total of 498,188.60 tonnes. (Source – Trading Economics)
Observing China's imports in September, it is clear that copper demand in China, the main consumer, will continue to be resilient despite slower economic growth.
Looking at other economies, the major central bank has raised interest rate hikes almost for the fifth time this year. The continuous interest rate hike to combat inflation has significantly impacted Copper prices and major economies globally in the third/second quarter. Currently, the US economy remains stable amid aggressive interest rate hikes, which signalled a positive trend for higher Copper prices in the coming days.
Though the Chinese and US economies have moderately recovered from the global crisis by the fourth quarter of 2022, all other major economies, including India, Japan, and Europe, are still experiencing slower economic activity, weakened manufacturing growth, and interest rate hikes, which are impacting demand for base metals.
By analyzing the growth of other major economies, The International Monetary Fund has reduced the percentage of global economic growth due to worsening economic activity.
Because of ongoing pressures from high energy costs and rate hikes, the IMF reduced its global economic growth forecast for 2023 to 2.7% from 2.9%. The IMF also reduced China's 2022 growth forecast from 3.3% to 3.2% in July and its 2023 growth forecast from 4.6% to 4.4%.
Fears of an economic slowdown, which the International Monetary Fund has recently supported, may cause Copper prices to trade slower than expected in the rest of 2022. Because the global economy has yet to stabilize, Copper prices are expected to fluctuate to sudden highs and lows in the near term.
What Is The Outlook For Copper In 2022?
In the first quarter of 2022, Copper prices crossed Rs.870/KG (COMEX - 4.94 USD/Lbs) because of high demand amid war threats. However, Copper prices dipped in the second quarter, hitting nearly 2-year lows, led mostly by slowdowns in China and volatilities in the global economy.
Copper prices are expected to trade at moderately high levels in the final months of 2022 due to higher-than-expected demand, Chinese economic growth recovery, and upward pressure from rising interest rates.
While the long-term demand outlook for Copper remains bullish, the short-term demand growth appears bearish, keeping Copper prices on the rising trend. The best example is the ongoing global energy transition, which boosts demand and Copper prices through EVs and other electrification.
Global EV sales "reached 6.3 million in 2021, up 102% year on year, with this number expected to rise to 26.8 million units in 2030, according to the latest analysis from S&P Global Platts Analytics." So, the near-time crisis is pushing Copper prices to the darker side, and the long-term future for Copper prices is still brighter, which can make Copper prices hike to historic highs.
The current economic downturn activities made Copper prices decline dramatically. However, Copper prices are still in their rally, and several investors are predicting Copper prices may hit new all-time highs in the coming days because of their long-term usage in the global economy. So, what is your sentiment about Copper prices? Bullish Trend or Bearish Trend.