Mikkel Rosenvold
2 weeks ago

Analyst: Why Copper price is surging and why that may continue

Analyst Andreas Steno discusses recent trends in the copper market, highlighting China's significant role.
Photo by Epitavi
Photo by Epitavi

Copper markets have seen a notable surge in recent months, and there is growing interest in understanding the underlying causes. Analyst Andreas Steno from Steno Research explores whether the recent popularity of copper investments is driven by speculative trading or genuine demand increases in the global economy. The focal point of this analysis is China, a key player in the copper market.

According to Steno, the positive sentiment in the copper market began when data indicated that China was "hoarding" copper concentrate. He identifies several possible motivations for this accumulation: anticipation of a currency devaluation, preparations for an overhaul of the electrical grid, or efforts to secure supply chains for critical technologies such as electric vehicles (EVs), solar panels, and data centers. Each of these scenarios points to a strategic move by China to bolster its industrial and technological infrastructure.


In addition to China's activities, there are developments in the United States that could impact the copper market. Steno notes that US officials have floated the idea of creating a strategic reserve of copper cathode. This proposal may be a response to the significant stockpiling of refined copper by China. Such a reserve could help stabilize the market and ensure that the US has adequate supplies for its own technological and industrial needs.

A crucial aspect of the current copper market dynamics is the question of why Chinese copper inventories are not declining. Steno points out that this is a major concern for macro-managers and geopolitical analysts. If the build-up of copper stocks in China is not a temporary phenomenon but rather a sign of a long-term strategic shift, it could have profound implications for the global copper market.

While the high levels of Chinese copper stock might not be immediately bullish for the medium-term outlook, they could indicate a permanent change in market dynamics. Steno observes that many macro managers are currently buying into this notion, suggesting that they see the stockpiling as more than just a short-term

Steno also raises an important question about the current market: Is the surge in copper investment driven by actual increases in global demand, or is it merely the result of speculative trading? This distinction is critical for investors trying to understand the market's future direction. All eyes are on Shanghai, as China's actions and policies will likely provide the answers.

In conclusion, the copper market's recent trends are influenced heavily by China's strategic decisions and potential US responses. Whether this is a sign of increased global demand or speculative activity remains to be seen, but the developments in China are central to understanding the future of copper investments. As Steno highlights, the situation in Shanghai will be a key determinant in answering these pressing questions.

Disclaimer

The information provided by this Site is for general informational purposes only. All information on the Site is provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information on the Site.

More News

5 hours ago Federal Reserve Sees Progress on Inflation, Adjusts Rate Cut Expectations The Federal Reserve has adjusted its forecast for rate cuts this year, citing persistent inflation despite recent progress. High borrowing costs are expected to linger, impacting consumers and the broader economy.
6 hours ago Bitcoin Holds Steady as Fed Maintains Interest Rates: A Sign of Economic Caution In a cautious move, the U.S. Federal Reserve opted to keep interest rates unchanged, causing Bitcoin to hold its ground. Read more about the economic implications and market responses here: "The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year."
9 hours ago High-Stakes Showdown: Tesla Shareholders Decide on Elon Musk’s $56B Pay Package Tesla shareholders are set to cast their votes on Elon Musk's controversial $56 billion compensation package, a decision that could have far-reaching consequences for the company.
12 hours ago USDMXN: A Golden Opportunity USDMXN: A Golden Opportunity Amid Mexican Election Sell-Off, Says Steno Research Analyst
1 day ago EU's New Tariffs on Chinese EVs Hit Tesla and BYD Stocks! Tesla (TSLA) and BYD (1211) Stocks Plummet After EU Tariff Announcement
1 day ago Macro Mondays: Escaping the TRAP of Sideways Markets Andreas Steno, Mikkel Rosenvold And Mads Eberhardt talk macro and crypto
1 day ago EU launches trade war with China In a bold move that has sent ripples through global markets, the European Union has effectively launched a trade war against China. This decision, announced just three days after the European Parliament elections, raises significant questions about the influence and timing of the EU’s legislative body.
1 day ago July Bloodbath: Metals Set for Major Crash? Brace yourselves for a tumultuous July in the metals market! Industry experts are sounding the alarm as cluster risks in metals like gold, silver, and copper threaten a significant downturn. Here's why July could spell disaster for metal investors.
1 day ago 5 Stories To Invest in for Emerging Markets 5 Stories that might interest you if you're into investing in Emerging Markets