The price of the metal fell from US$5.20 per pound last week to US$4.77, 8.3% down.
After reaching an all-time high at the Chicago Stock Exchange of US$5.20 per pound (US$11,460 per ton) a week ago, copper futures for July have fallen and settled at US$ 4.77 per pound (US$ 10,512 per ton) last Wednesday, thus putting a pause to the upward trend this year.
Copper trade in Bolivia enjoyed spectacular volumes that reached more than 10 million tons in contracts, worth almost US$115 billion in a single day in mid-May.
This positioned copper as the most active contract at the Chicago Mercantile Exchange in a 24-hour period. That day's volume more than doubled the average daily volume of the Dow and three times German bond transactions.
The squeeze to short positions, more characteristic of trading in the United States than elsewhere, now risks turning into a bearish market for long positions.
With ships from Chile and Peru diverting to North America after Chinese import arbitrage --another reliable source of volatility and tradability-- copper futures volumes have returned to pre-madness days.
COPPER
A new report from Australian bank Macquarie titled “Panama Hold'em” suggests copper corrections will continue and forecasts average prices of US$9,800 per tonne by the third quarter.
By the end of the year, the price of copper should once again exceed $10,000, says London-based commodities strategist Alice Fox. Her peers at Macquarie's offices in London, Singapore, Shanghai and Delhi agree.
World-renowned hedge fund manager Pierre Andurand predicted the price of the metal will quadruple to highs of $40,000 a tonne over the next four years.
“I think we could reach $40,000 per ton over the next four years or so. I'm not saying it will stay there. In the end, we will get a supply response, but that supply response will take more than five years,” Andurand told the Financial Times.
Market analysts generally attribute this trend to a combination of speculative buying and genuine supply constraints, suggesting the possibility of a sustained bull market for copper.
While the rebound in copper prices is encouraging for investors, analysts warn that the market needs to validate this trend beyond the short-term momentum. The performance of the sector could significantly impact earnings, particularly if copper maintains its price above US$4 per pound.
In response to this volatility, production in China has increased in recent months, mitigating the impact on supply.
AI AND ENERGY TRANSITION BOOST COPPER IN BOLIVIA
The importance of copper in the transition to net zero emissions in Bolivia cannot be underestimated. Its indispensable properties, including high electrical conductivity, thermal efficiency and recyclability, make it vital for renewable energy systems, electric vehicles and infrastructure development.
The artificial intelligence sector is tremendously data-intensive, fueling rapid growth in data center capacity globally. These consume energy voraciously and require copper, not only in the data center itself, but even more so in connections to the electrical grid, backup generators and so on.
Renewable energy technologies, such as solar photovoltaics and wind turbines, require significant amounts of copper for efficient transmission and distribution of electricity. Electric vehicles also rely heavily on copper for components such as motors, inverters, and electrical wiring.
Demand for copper is expected to outpace supply growth, raising concerns about potential shortages.
Addressing these challenges requires strategic investments in copper production and recycling to support the global shift towards sustainable energy sources and achieve the goal of net zero carbon emissions by 2050.
