On a percentage growth basis, copper prices have outperformed both gold and silver to start 2024. Traders are finding that copper is integral in AI development, electric vehicles, and renewable energy sources. So they are betting on long term demand to stem from these sources. The following numbers are from Myra P. Saefong of MarketWatch, “On Wednesday, copper for July delivery settled at $4.49 a pound on Comex. Most-active futures are up 12% so far this month and trade 15.3% higher this year.Copper has seen even larger year-to-date percentage gains than gold and silver. June gold settled at $2,338.40 an ounce Wednesday, up 4.5% for the month and 12.9% for the year, after marking a record-high settlement on April 19 at $2,413.80. Silver for May delivery settled at $27.35 an ounce, trading about 9.8% higher this month for a year-to-date rise of 13.5%.”
There are several reasons for this increase and potential longevity in copper prices, John Caruso, senior market strategist at RJO Futures, said, “We have seen signs of improvement in the U.S. and Chinese manufacturing data, and of course the overall dovish policy stance by the [Federal Reserve], in the face of above-trend economic growth and inflation still above target, has helped fuel the demand for the metals markets,” Futures demand for copper looks “increasingly inevitable” with the artificial intelligence (AI), electric vehicle (EVs), and the “decarbonization revolution as a whole,” he said. “Copper will undoubtedly play an integral role in this transition.” Copper demand has been on the rise for the last century, as countries and economies increase production and innovation, copper always seems to play an integral role in that process. The Chinese have been adding tons of copper to their inventories as they buy up all the copper they can find, this is to aid their economy in the production and implementation of new “green” technologies. In addition to increased demand for copper, there is also evidence of a decrease in supply of the precious metal.
Myra P. Saefong of MarketWatch wrote, “A global surplus in copper fell to about 84,000 metric tons in January, from a surplus of 109,000 in January 2023, preliminary data from ICSG show. For the year 2023, the world saw a total deficit of 85,000 metric tons, following deficits in each of the previous three years.” A lack of new mines and challenges in the production of existing mines, supply of copper could dwindle in the future, combine that with the increasing demand, we could see a huge bull market in copper coming our way.