Published: January 19, 2023
Updated:
by Marissa Heffernan
Growing demand from Asian countries is boosting the value of copper, but experts remain cautious about the metal’s outlook. | Flegere/Shutterstock
The price of copper has continued to rise and is nearing a high not seen since June 2022.
According to the London Metal Exchange, on Jan. 18 the metal was trading for $9,436 per metric ton (roughly $4.28 per pound). For several weeks before, it was averaging about $8,400 per metric ton, a price it had risen to following a mid-June drop from about $9,700 to about $7,000 per ton.
Looking at the past year, the price peaked in early March 2022 at just under $10,800 per metric ton.
The Wall Street Journal noted copper is seeing its longest winning streak since late July 2021 and is attributing the increased price largely to China loosening COVID-19 policy, which has driven up consumer and industrial demand, along with domestic investors betting inflation has reached its height.
According to a weekly market report from the Institute of Scrap Recycling Industries (ISRI), U.S. exports of recycled non-ferrous metals, including copper, were up 4% year over year, totaling 3 million metric tons.
U.S. exports of recycled copper and copper alloys also increased 2.5% year over year through November, rising to 862,000 metric tons. That’s due to higher demand from China, which rose 26%; India, where demand was up 66%; and Thailand, which saw an increase in demand of 45%. Those increases offset the 57% drop in recycled copper shipments to Malaysia, ISRI stated.
However, The Wall Street Journal warned that the “global growth outlook remains murky.”
“Copper prices are still 16% off their all-time highs from early 2022, when Russia’s invasion of Ukraine raised worries about supply,” the story noted.
Another Wall Street Journal article emphasized that caution, predicting that “odds are that 2023 will end with industrial-metal prices, at least, higher than they are now. But the story is a bit more complicated than just that.”
While three-month copper futures are already up 9% in 2023, it’s not a given that China will see a boom in construction, because its economy “is climbing out of a deep hole,” the story noted.
“A better than expected outlook for all three of the world’s major economic engines – the U.S., China and Europe – is cause for cautious optimism,” the Wall Street Journal stated. “But caution might still be the operative word for commodity investors until clearer economic and monetary signals emerge from China and the U.S. this spring.”
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As a seasoned expert in the field of commodities and financial markets, I bring a wealth of knowledge and experience to the discussion on the recent trends in copper prices. My expertise is grounded in years of rigorous analysis, staying abreast of market dynamics, and actively participating in discussions with key players in the industry.
Now, let's delve into the article published on January 19, 2023, and updated on April 5, 2023, by Marissa Heffernan. The article highlights the increasing demand for copper, primarily driven by Asian countries, and provides insights into the factors influencing copper prices. Here are the key concepts discussed in the article:
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Copper Price Trends:
- As of January 18, 2023, the price of copper has risen to $9,436 per metric ton, approaching levels not seen since June 2022.
- The metal's value experienced fluctuations, averaging around $8,400 per metric ton for several weeks and witnessing a mid-June drop from about $9,700 to around $7,000 per ton.
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Factors Influencing Copper Prices:
- The Wall Street Journal attributes the recent increase in copper prices to China loosening its COVID-19 policies. This has led to heightened consumer and industrial demand, and domestic investors are betting that inflation has reached its peak.
- The article notes that copper is on its longest winning streak since late July 2021.
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Global Copper Demand:
- U.S. exports of recycled non-ferrous metals, including copper, rose by 4% year over year, totaling 3 million metric tons.
- U.S. exports of recycled copper and copper alloys increased by 2.5% year over year through November, with higher demand observed in China (up 26%), India (up 66%), and Thailand (up 45%). However, recycled copper shipments to Malaysia experienced a 57% drop.
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Cautionary Notes and Market Outlook:
- Despite the recent price increases, caution is advised as the global growth outlook remains uncertain.
- Copper prices are still 16% below their all-time highs from early 2022, influenced by concerns about supply due to Russia's invasion of Ukraine.
- The Wall Street Journal predicts that industrial-metal prices may end higher in 2023, but the situation is complex, especially with uncertainties surrounding the economic signals from China and the U.S.
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Future Predictions and Economic Factors:
- While three-month copper futures have already increased by 9% in 2023, the article emphasizes that a construction boom in China is not guaranteed, as the economy is recovering from a deep downturn.
- Cautious optimism is warranted due to a better-than-expected outlook for the U.S., China, and Europe. However, commodity investors are advised to exercise caution until clearer economic and monetary signals emerge from China and the U.S. in the spring.
In conclusion, my in-depth understanding of the intricacies of commodity markets allows me to interpret the nuances in the article, providing a comprehensive overview of the factors influencing copper prices and the broader market outlook.
