Copper continues to be a big mover at the moment, as we are sitting near all-time highs in several benchmarks. This is a game of electrification and a lack of supply coming out of several high-profile mines in Chile.
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Copper: Supply, Demand and Electrification Keep Prices in Focus
The copper market initially gapped lower to kick off trading on Wednesday but has since found its legs again as we continue to threaten new all-time highs. This has been the behavior of the market for some time now, and I don’t see this changing any time soon. The markets will continue to be clean, in the sense that this is a true supply and demand story in copper.
The copper market has a very simple dynamic going on right now: the electrification of the global economy is causing massive demand for copper, while production in places like Chile is slowing down. There are a couple of mines down there running at less than full capacity due to seismic activity and floods.
Ultimately, every time this market pulls back, I like the idea of buying copper.
Clearly, the demand is going nowhere, with AI data centers alone being a huge part of it. The $6.50 level is an area that should continue to see a lot of support, especially now that the 50-day EMA is hanging out in the same region.
Ultimately, I like buying copper every time it falls. I do think that this is a longer-term buy-and-hold market if you have the ability to do that. I would look at the consolidation through the prism of a potential 75-cent move, so we could be talking about $7.25 based on this move.
Any short-term pullback at this point in time, I continue to look at as a gift. I have no interest whatsoever in shorting. This is a market that some are holding as an investment at this point, so if you cannot do that in futures, an ETF could suffice if you choose to go that route.
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