Surging Copper Prices Signal Optimism About Global Growth

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Global investors are piling into bullish wagers on copper prices, sparking the quickest rally in the industrial metal in years and signaling that many money managers remain hopeful about the economic outlook despite rising coronavirus cases in much of the U.S.

With investors pouring money into assets that have performed well recently, front-month copper futures climbed in 12 consecutive sessions through Monday to $2.94 a pound, their highest level since April 2019. They slipped on Tuesday. The 12-session winning streak was the metal’s longest since late 2017, when a rosy outlook for the world economy and upbeat momentum pushed prices higher.

Because copper is widely used in the global manufacturing sector and critical to making everything from smartphones to houses, many market watchers use its price as an economic indicator. The metal is closely linked to growth in China in particular. The world’s second-largest economy consumes roughly half of the world’s copper, and recent data indicate a growth recovery there that is stronger than many analysts anticipated after the coronavirus shut down Chinese manufacturing early in 2020.

The 38% climb in copper from a low hit in March is part of a broader surge in volatile assets as individual investors and speculators around the world try to ride the momentum. The Shanghai Composite stock index recently hit a nearly 2½ year high, while the tech-laden Nasdaq Composite has risen to fresh records in recent days.

Gains in popular investments like electric-auto maker Tesla Inc. have been particularly staggering lately, underscoring a wide-ranging rally that is leaving skeptics scratching their heads.


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“It’s just one of these environments,” said Will Rhind, chief executive of ETF provider GraniteShares, which manages a roughly $60 million ETF tied to a basket of commodities that includes copper. “Whether it’s copper or Tesla, it seems like everything is going up.”

Hedge funds and other speculative investors increased net bets on higher copper prices in three consecutive weeks through July 7, powering them to a two-year high, Commodity Futures Trading Commission figures show. Copper isn’t the only metal flashing a bullish signal for the economy. Traders have also been bidding up prices of other raw materials such as aluminum and tin in recent weeks.

The gains are a boon for diversified mining companies such as Rio Tinto PLC and BHP Group Ltd. BHP 3.13% that have seen the coronavirus pandemic sap demand for their core products. Shares of those companies and copper miners such as Freeport-McMoRan Inc. FCX 3.69% and Southern Copper Corp. SCCO 3.11% have surged in the past three months.

Demand isn’t the only factor fueling the gains. Analysts project long-term copper shortages due to a dearth of investments in new mines. More recently, mine and refinery disruptions in key producing nations like Chile due to the coronavirus threaten to lower production. A worker strike at a Chilean mine operated by Antofagasta ANTO 3.47% PLC and co-owned by Barrick Gold Corp. GOLD 3.52% marks the latest potential copper supply disruption.

With output from some mines limited and demand picking back up, global copper stockpiles have been dropping since March, according to Christopher LaFemina, a metals and mining analyst at Jefferies.

“Without a significant increase in investment in new capacity, the market is poised to be materially undersupplied as long as demand continues to recover,” he said in a recent note.

Still, the recent advance has many skeptics who worry that copper has risen too quickly given a fragile demand outlook in much of the western world. The metal has outpaced other so-called cyclical assets tied to the economy such as oil prices and bank shares so far this month, signaling to some analysts a possible disconnect in the copper market.

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Meanwhile, coronavirus cases continue to rise in states such as California, Texas and Florida, dulling hopes for a swift U.S. economic rebound. And President Trump recently damped expectations for a phase-two trade accord between the U.S. and China, potentially weakening global trade flows and hurting copper demand.

Copper is shaking off those concerns for now, but some traders are skeptical the steady climb will continue.

“It’s taken us by surprise,” said Edward Meir, a consultant focused on metals at brokerage ED&F Man Capital Markets. “I would be cautious about this rally.”

Write to Amrith Ramkumar at

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