Global copper markets are oversupplied and demand from China remains weak, according to one analyst, but those who stay invested in the metal are likely to be rewarded in the long term, he says.
Reid I’Anson, senior commodity analyst with Kpler, told BNN Bloomberg in a Thursday interview that at the beginning of this year, his near-term outlook for copper remained weak despite the price surge the metal saw in the first few months of 2024.
“By the time we got to May, that thesis started to play out. People started to realize that especially in China, which is the driver of copper demand globally, the fundamental backdrop really just wasn’t there, especially across the property market,” he said.
“Thankfully in China you still have this large renewable buildout there, which is helping to support copper demand, but until the property market in China starts to show at least some signs of flattening out, I think weakness within the spot market will remain.”
Copper is off about 20 per cent from the all-time high it hit in mid-May, falling to below US$9,000 a tonne on Thursday for the first time since early April.
I’Anson said that another factor impacting the current price of copper is supply, which he said “looks pretty strong right now.”
“If you’re looking at supply and demand balances, we are oversupplied,” he added.
I’Anson said that he expects more near-term volatility in the price of copper, but argued that holding copper investments over the long-term “makes a lot of sense” given the metal’s use in electric vehicle (EV) and artificial intelligence (AI) technology.
“Right now, these stories around the EV buildout and AI are longer-term stories… over the long run, we are still bullish, we think copper looks like a good investment,” he said.
“If you’re trading it in shorter periods of time though, you need to be careful and you need to monitor what’s happening in China.”