LME copper prices

Max Layton, Citi’s managing director for commodities is featured in a Bloomberg story today on the coming wave of copper demand. LME copper prices are at $8,300 today and he sees them 'easily' rising to $12,000-15,000 in 2025 as flat supply runs into a wave of electrification demand.

Some things he said:

  • “If you want to put on a decarbonization trade in commodities, the only truly liquid commodity is copper, and it’s the most liquid by a country mile"
  • “Copper’s unique characteristics mean that it could make oil’s 2008 bull run look like child’s play.”

He notes that prices have slumped this year on short-term recession worries, particularly with China demand disappointing. That's led to CTAs taking a net short position in copper for the first time in three years.

The way Citi sees it, that bearishness will inevitably turn to bullishness with huge paper flows to come.

What could get the ball rolling is if China begins to stimulus its economy. Today's China CPI reading was just +0.2% y/y so there's plenty of opportunity to goose the economy, though officials are still trying to deflate the property market.

There has been some upward momentum in copper in the past three weeks, after hitting a low of May 24, it's up 7%.

Here's the latest CIBC commentary:

We continue to focus on the resilience of global demand ahead of the recessionary environments anticipated globally, as well as fluid supply dynamics. We expect prices to be supported at lower levels by fundamentals in the near term as we anticipate some demand destruction from recessionary impacts, coupled with independent forecasts that 2023 will end in a modest supply surplus.