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Copper’s on a High: Why Investors Are Optimistic

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Copper prices

Copper prices have regained momentum in October after showing weakness in the last month. So far, copper has risen 4.9% in October based on the closing prices on October 12. Copper fell 4.2% in the last month. Although copper is still below its 2017 highs that it hit in the beginning of September, it’s still trading with handsome year-to-date gains of 24.1%.

Other base metals including aluminum and zinc are also trading with strong gains this year. However, seaborne iron ore prices have shown weakness due to concerns about a slowdown in Chinese demand.

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Copper mining companies

Copper mining companies have also followed copper higher. The rise in copper prices is a welcome break for copper miners like Freeport-McMoRan (FCX), Glencore (GLEN-L), and First Quantum Minerals (FM). We should remember that copper prices were in a long-term bear market after prices peaked near $10,000 per metric ton in 2011.

Copper has been on a losing streak since 2011. Before 2016, LME (London Metal Exchange) copper prices fell every year since 2011. In 2012, copper managed to hold steady and closed roughly flat compared to the previous year. However, copper’s five-year drought ended last year when it rose 17.4%. Concerns eased about China’s slowdown and President Trump’s election fueled hopes of more growth in the US (DIA) (DJIA-INDEX), which boosted metal prices.

Series overview

In this series, we’ll look at some of the key factors that are impacting copper prices this month. We’ll also analyze whether copper’s upwards price action is backed by fundamentals. We’ll see if the markets are getting a little carried away with copper’s outlook (AAL-L).

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