The base metals complex is on the climb in futures exchanges globally, coupled by declining spot prices in the physical markets. This explicit drop in demand for the commodity itself is based on suppliers staying out of the markets due to inflated prices. Conditions such as supply disruptions – including recent mine closures, declining ore grades, and a ban on Russian metal deliveries – have tightened the global copper market.

While the price of copper has made a 15% jump YOY in terms of futures, the copper market has seen a significant drop on spot purchasing. Year to date, the spot price on copper was down 17.14% in May, with a 52-week high reached $4.12 per pound on Oct. 6, 2023, and the 52-week low dropped to $2.96 per pound on May 21, 2024. Investors, however, see future price rallies on the horizon.

Copper, a ductile metal which is a key barometer for economic activity, led the gains among the complex, with the London Metal Exchange three-month copper price surging to an all-time high of $10,954 per tonne on May 20, roughly $5/oz, and up by 27.4% from the start of 2024.

Looking ahead, the long-term demand outlook for copper remains very bullish. The global push towards decarbonization and green technologies is poised to fervently drive significant demand. Electric vehicles (EVs), renewable energy infrastructure, and the AI sector all require copper to continue scaling. For example, an electric vehicle uses about 78 kg of copper, compared to just 22 kg for a conventional car. An offshore wind turbine contains about 8 tonnes of copper per megawatt of generation capacity.

This forward-thinking modality has prompted major banks like Citi to declare the start of a new secular bull market in copper, with price forecasts as high as $12 k per metric ton by 2026. Meanwhile, Andurand Capital is calling for copper at an massive $40 k.

Notably, Trafigura predicts that artificial intelligence (AI) and data centers alone could add an extra 1 million metric tons to copper demand by 2030, exacerbating an already projected 4-5 million ton supply deficit.

Likewise, Citi sees some near-term consolidation as likely, but believes sub-$9,500/ton copper is an attractive buying opportunity for bullish investors and consumers, given the resilient end-use demand.