Copper futures continued rocketing on Tuesday, defying expectations that the industrial metal would experience a reversal as it is in overbought territory. Copper has been one of the top-performing assets this year from strengthening global demand and waning worldwide supplies. Can the red metal keep testing fresh record highs?
June copper futures rose $0.0395, or 0.78%, to $5.1185 per pound at 15:46 GMT on Tuesday on the New York Mercantile Exchange. Copper is up 15% this month and has rallied more than 32% year-to-date to an all-time high. Over the last 12 months, the red metal has spiked 40%.
Market watchers say that copper is soaring based on demand, be it the construction of data centers amid the artificial intelligence hype or the continued electrification of the international economy.
Indeed, Dr. Copper, which has been a historical gauge of the global economy, is a critical component of the transition to the green economy. It is vital for manufacturing electric vehicles, building power grids, and constructing wind turbines. The industrial metal is also needed for cables, such as busbars, power cables, and electrical connectors, used in data centers.
“With demand from EVs still growing, albeit at a slower pace, the focus has shifted towards the copper needed in the data center build-out,” the Bank of America said in a note.
Industry groups say that global supplies could decrease in the coming year amid lower production expectations.
According to the International Copper Study Group (ICSG), output growth projections for 2024 plummeted to 0.5%, down from the October 2023 forecast of 3.7%.
Many firms are facing legal challenges amid environmental fears and fiscal restraints.
This could lead to higher prices in the near term, says Citibank economists. “We see copper climbing to $10,500/t in the near-term as signs of expected physical tightening perpetuate the momentum rally of recent months.”
In other metal commodities, June gold futures tumbled $6.40, or 0.26%, to $2,432.10 per ounce. July silver futures shed $0.136, or 0.42%, to $32.29 an ounce. June platinum futures were little changed at $1,065.00 per ounce. June palladium futures climbed $10.40, or 1.01%, to $1,042.00 per ounce.