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The global copper market is expected to experience steady growth in the coming years. The growth is primarily attributed to the increasing copper demand across various industries, such as construction, electrical engineering, electronics, and automotive. The construction industry is anticipated to be the main contributor to the growth of the copper market, fuelled by the rising demand for copper in building and infrastructure developments.
The surge in demand for copper is expected to be driven by the growth of the burgeoning renewable energy sector, particularly within solar and wind energy. The utilisation of copper in the fabrication of solar panels, wind turbines, and other renewable energy components is projected to underpin the demand for copper in the years ahead.
Copper has emerged as the leading commodity, given its crucial role across all aspects of the current energy transition. The anticipated surge in copper consumption for decarbonisation purposes is forecasted to rise substantially, driven by battery grid storage, electric vehicles and charging, and power generation.
Copper hits a 14-month high amid strong factory data from China
The recent rally in copper prices has captured the attention of global markets, with the metal surging back above the $9,000 per ton. Key drivers of this rally include optimistic factory data from China, the world’s largest consumer of copper, and speculations regarding output cuts by major smelters.
In March, China’s official manufacturing Purchasing Managers Index (PMI) registered its highest reading in a year, raising optimism about China’s economic activity, which is a key consumer and producer of copper. This positive sentiment was further bolstered by strong exports and rising consumer prices, painting a promising picture for the manufacturing industry and raw material consumption.
US Manufacturing Resurgence
In addition to China’s improvement in economic conditions, the United States witnessed a turnaround in its manufacturing sector in March. After a 16-month decline, the U.S. production rose sharply and new orders increased, halting its prior downward trajectory. This signals a potential rebound in production activity. While these developments are optimistic, prices paid by manufacturers increased, raising concerns in regard to inflation and the Federal Reserve’s stance on interest rates.
Tightened Global Copper Market
The Cobre Panama project, one of the world’s largest open-pit copper mines, was shut down last year, cutting approximately 1.7% of global supply which tipped the copper market into deficit this year. This combined with more key copper miners lowering their outlooks have added to supply concerns. With not much supply coming for the rest of the decade, material shortages are likely.
Additionally, recent reports showed that the biggest Chinese copper smelters are considering cutting output between 5% to 10% of overall production. Such decision was triggered because of production disruptions in major global copper mines which cut supplies of copper ore. The shortages of raw material drove processing fees for converting concentrate into refined metal to near zero.
The proposed cutting production by the largest Chinese smelters highlights the challenges they face, despite uncertainties whether the cuts would be implemented or not. Lower production of refined copper is also expected to tighten global copper supplies, which in turn could lead to higher copper prices.
Source: TradingView
Technical analysis
Copper prices have been trading sideways over the past nine months, fluctuating in a wide range between $7,841 and $9,445. The current rally is approaching the upper boundary of the range, where initial selling pressure could arise. Given the latest improvement in momentum conditions, a subsequent breakout is very likely to follow. Once key resistance of $9,445 is cleared a strong impulsive rally could unfold over the medium-term. The potential upside price target is in the range between $10,400 and $10,800.
Conclusion
Copper surged to its highest levels in over a year, triggered by renewed optimism about global economic growth and expectations of interest rate cuts from the major central banks around the world. This surge reflects growing confidence among investors that the downturn in manufacturing, including China, may have passed its worst.
Professional investors looking for exposure to copper may consider Leverage Shares Copper ETCs which track the performance of the most liquid copper futures traded on COMEX.
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Notice
If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.
If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.
Risk Warnings
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
United States Visitors
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Exclusion of Liability
Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
Leverage Investment
Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.
Cookies
Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.
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