Can Copper Reach $6,000 per Metric Ton in 2017?




Market observers closely track copper prices (DBC). While most metals generally follow the underlying demand-supply dynamics, according to some observers, copper prices also tend to reflect macro developments.

Copper has been referred to as “doctor copper” because many analysts see copper prices as a reflection of the global economy. However, some analysts point out that copper is just like any other industrial metal driven by demand-supply dynamics and market sentiments.

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Price action

Copper prices had been trading in a tight range for a couple of months preceding Donald Trump’s election. However, copper price breached the psychologically crucial $6,000 per metric ton after Trump was elected. Though copper failed to hold onto that level, it settled at higher price levels as compared to its pre-election trading range.

Notably, 2016 was a roller coaster year for copper, which saw wild price swings. While prices fell below the $4,500 per-metric-ton level in January amid the global sell-off in the metals and mining space, prices recovered handsomely thereafter.

Copper closed 2016 with gains of ~17%. Copper miners (BHP) Freeport-McMoRan (FCX), Southern Copper (SCCO), and Glencore (GLNCY) also saw upward price action last year amid rising copper prices and improved market sentiments.

Series overview

While copper was strong in 1Q17 and briefly traded above $6,000 per metric ton level, it came under pressure in May. Copper momentarily dropped below $5,500 per metric ton last month amid concerns over Chinese demand.

In this series, we’ll look at the different factors that could help copper top $6,000 in coming months. We’ll also look at some of the bearish drivers that could drive copper prices down.

Let’s begin by analyzing copper’s supply-side dynamics.


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