Copper Prices Haven’t Hit Their Lows Yet, According to The Copper Journal Report

If you ever want to get an informed take on the copper market, your first read should be The Copper Journal (www.copperjournal.com) published by John Gross. Gross, a veteran of the metals markets for decades, is quoted all over the financial press and earlier this year appeared on CNBC to discuss copper pricing.

His most recent newsletter provided a succinct summary of the confusing series of swings in copper pricing. Gross said in his report that, “Fundamentals tell us prices should be higher, but the charts indicate lower values ahead. Earlier this year, sentiment was relatively upbeat, as were prices.

“And why not? Inventories were low and falling, and China, the linchpin of global industrial materials and base metals in particular, was expected to fuel more robust demand as the zero covid policy was finally being lifted. Just as important, the global copper market was in a deficit position, and the unanimous view of the world was that the ‘Green Energy’ transition would require more metal than could possibly be produced for years to come.

“Of course, the price had to continue moving higher — based not only on the fundamentals, but also because what the most brilliant guys in the room were telling us. For example, we are on the verge of another super cycle in commodities driven by China, said one. Copper is the new crude oil, said another, and problems in the banking sector will spark a flight of capital into commodities.”

What a difference a few months make. Gross says copper saw its last surge from $3.82 in December to $4.12 in January, and that at this time many industry observers expected copper prices to march higher.

COMEX copper prices are currently sitting at $3.87, it seems like a long time ago when copper seemed headed for $5, peaking at $4.94 on March 4, shortly after Russia invaded Ukraine. But since that time, China’s economy has slowed down, and declines in U.S. building and real estate activity, troubled regional banks, rising interest rates and high vacancies in the commercial real estate sector pose additional threats.

Copper watchers have reigned in their growth forecasts, and Gross said the World Bank now expects copper to average $3.86 in 2023 and fall to $3.63 in 2024. “This outlook concurs with our Long-Term Copper Study — not the price itself specifically, but rather in market direction,” he said in his most recent report. “Considering the 2023 year-to-date average price through April is $4.06, we may have already seen the highs, but the lows are nowhere in sight yet.”

Along with publishing The Copper Journal, Gross also consults on price risk assessment, hedging strategies, assessing scrap metal value, as well as auditing and contract compliance To purchase a $295 annual subscription to The Copper Journal, or learn more about his other services, contact Gross at [email protected].