Will Copper Prices Soar In 2024?

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Copper trading involves one of the most demanded commodities in the global market as we speak. Copper is vital as the metal is used almost everywhere in daily life, from electric wiring to cars and computer microchips. The introduction of electric vehicles (EV) that require more copper and the growth of microchip production for use in Artificial Intelligence (AI) implementation could fuel demand.

Some analysts forecast copper prices to rise in the next years but is this prediction going to materialise?

Copper Prices Fluctuate As Recession Signs Appear

Some economies have faced issues with high inflation figures in the last two years. As a result, authorities were forced to implement tight monetary policies that brought economies to the brink of recession. During such periods consumers tend to put a limit on their spending and reduce purchases of goods. It is in these periods that commodities such as iron, copper and others face downward pressures in terms of value as businesses suspend or adjust their production plans.

Depicted:Admirals MetaTrader 5 – Copper (1,000 lbs.) / USX Monthly Chart captured on Feb 23rd 2024. Date Range: May 1st 2016 – February 23rd 2024. Past Performance is not an indicator of future results.

 

Market analysts were not surprised when copper prices slid in 2023 as monetary policy tightening, observed across the world, impacted economies, especially the ones of developing countries. In the first days of February 2024, copper exchange prices fell to a three-month low, approaching $8200 per metric ton. However, by February 20th, copper prices climbed to a three-week high reaching $8,548 per metric ton.

ICSG: World copper mine production likely to increase by 3.7% in 2024

The International Copper Study Group (ICSG), an organisation that aims to increase copper market transparency and promote international discussions and cooperation on issues related to copper, is optimistic regarding global copper production in 2024.

Depicted:Admirals MetaTrader 5 – Copper (1,000 lbs.) / USX Daily Chart captured on Feb 23rd 2024. Date Range: October 13th 2023 – February 23rd 2024. Past Performance is not an indicator of future results. 

 

ICSG market analysts suggest that world copper mine production is expected to increase by 3.7% in 2024 noting that “besides additional output from new or expanded mines, production rates are expected to improve in countries affected by operational constraints in 2023, namely Chile, China, Indonesia, Panama and the US.” 

Copper Deposit Discovery To Rank In Top-3 Mines Globally

KoBold Metals, a California-based startup whose backers include billionaires Bill Gates and Jeff Bezos announced the discovery of a vast copper deposit in Zambia. The company’s executives said that it had found Zambia’s largest copper deposit in the last one hundred years and predicted that the, so-called, Mingoba site could become one of the world’s top three high-grade copper mines. 

The newly discovered copper deposit could offer an alternative solution for businesses that require the commodity to operate as western countries with the US in the vanguard have engaged in a commercial conflict with China which is one of the largest producers in the world.  

Speaking to Financial Times reporters, company executives said that they aim to start producing copper at the $2bn underground mine sometime at the beginning of the next decade.

Copper Trading: Market Analysts Discuss Copper Prices

ING analysts stressed that the Federal Reserve monetary policy will likely play a significant role in how copper prices fluctuate. “Copper prices will be supported by a weaker US dollar on the back of US Federal Reserve easing. We believe the Fed’s interest rate path will continue to drive copper’s short-term price outlook. Copper prices will benefit from looser monetary policy, which will alleviate the financial strain on manufacturers and construction companies by reducing borrowing costs. But if US rates stay higher for longer, this would lead to a stronger US dollar and weaker investor sentiment, which in turn, would translate to lower copper prices,” they noted in their report.

Goldman Sachs: Copper prices likely to rise on the back of Fed rate cuts

Goldman Sachs economists said in a note shared by Reuters, on February 21st, that copper and gold prices could get a boost in case Fed policymakers decide to reduce borrowing costs. “The immediate price boost from a Fed driven 100 basis point decline in U.S. 2-year rates is the largest for metals, especially copper (6%), and then gold (3%), followed by oil (3%). The positive impact of lower interest rates on both commodity demand and supply makes the commodity price impact ambiguous in theory,” they wrote.

ANZ: Expecting growth in copper demand from US, China and India in 2024

ANZ analysts suggest that weak outlook regarding copper prices that prevailed in 2023 might soon be history as market expectations seem to be changing. In the New Zealand’s bank report, it is noted: “Copper has a broad consumption spread across the global economy, leading to concerns over demand amid tighter monetary policies and weaker economic growth. However, it has remained strong amid an increased focus on electrification and decarbonisation. We expect growth in demand from China, US and India, three of the top five consumers, to reach 4.3% in 2024. This comes amid increasing supply-side issues. Unplanned disruptions are likely to remain high as producers struggle with high costs and falling quality issues. Political risks also remain high, putting new mine development at risk.”

The report by ANZ forecasts that copper prices would be underpinned in 2024 by a market deficit, maintaining their short-term target of $9,000 and expect that to lift above $10,000 over the next 12 months.

Trading Copper With Admirals

The copper prospects debate will likely continue as market conditions change.   Beginner traders, however, should be careful with which assets or instruments they add to their portfolios. The lack of experience and the feeling of excitement might lead to the wrong decisions.

While experience comes only with engaging in trading, education can offset the disadvantage to some extent. Beginner traders should delve into the world of trading by using educational materials such as webinars, articles, how-to guides, videos etc. These materials may be available for free by brokers so there is no reason not to take advantage of them.

Risk management tools are also a way for traders to make up for the lack of experience. The stop loss or take profit can mitigate risks when used properly. Risk management tools come embedded in the most popular platforms such as the MetaTrader 4 or MetaTrader 5. While exploring the potential of these platforms, beginner traders should learn how to utilise these tools to their advantage.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

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