The copper market saw a near doubling in prices over the last year.
Copper fell to an LME low in March 2020 of $4,371 per metric ton. Fast forward to this year, however, and it closed at $8,764 prior to this past weekend.
But anyone following the copper market will know that even that price is off a late February high of over $9,600.
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Copper market ups and downs
So why has the price dropped back so significantly from its high?
Is this just a pause before forging higher, as Citi Bank would have us believe?
In a recent report, Citi said it expects the metal to fetch $10,000 per metric ton “sooner rather than later” on the basis of a tight supply market. Furthermore, Citi forecast a return to over $9,000 over the next three months and to $10,000 between 6-12 months out.
But a Reuters column by Andy Home offers a more cautious analysis. Home suggests the rapid rise last year and into this was the result of an unexpectedly strong rebound in Chinese manufacturing. As a result, that prompted a surge in imports of refined metal.
Strong investor interest and supply chain restocking abetted price rises. Investors bought into the electrification story and demand from strong electric vehicle (EV) sales. They bought into Citi’s supply constraints, with mine supply hampered by ongoing pandemic restrictions and the longer-term narrative of falling grades and lack of new mine investment.