Copper Prices Surge Despite Economic Slowdown, Structural Factors Cited
Manufacturing indicators in major economies also show regional slowdowns and stagnation.
SEATTLE (Scrap Monster): International copper prices have continued to hit record highs. According to the London Metal Exchange (LME), on the 19th, copper prices rose to $11,886.23 per ton based on the settlement price. This marks an approximately 37% increase compared to the end of last year ($8,652.67) and a roughly 5.8% rise from the end of last month ($11,233.69). As copper, a representative raw material reflecting economic trends, shows a record-breaking bullish trend, funds are flowing into related financial products. As of the 19th of this month, among domestic listed index funds (ETFs), 'TIGER Copper Physical' rose by 8.5%, and 'KODEX Copper Futures (H)' increased by 6.1%. The year-to-date gains for these two ETFs since the end of last year stand at 29.4% and 25.1%, respectively, illustrating how rising copper prices translate into ETF returns.
Copper has long moved closely with global industrial production. When manufacturing activity was expected to rise and investments in construction and infrastructure were anticipated to increase, copper demand grew, and these expectations were often reflected in prices first. This earned copper the nickname 'Dr. Copper.' However, the recent trend differs from the past. Global industrial production, calculated by the Netherlands Bureau for Economic Policy Analysis (CPB), increased by only about 2.5% from the end of last year to September of this year. Manufacturing indicators in major economies also show regional slowdowns and stagnation.
Despite this, copper prices have surged to historic highs. Foreign media attribute the recent copper bullishness to structural factors such as supply disruptions, expanding regional price premiums, and supply-demand distortions due to inventory shifts, rather than a global manufacturing recovery. Andy Home, a commodities columnist for Reuters, recently analyzed, “Copper prices are showing record strength, but the global manufacturing sector has not heated up at the same pace.”
Domestic securities firms have made similar diagnoses. Jang Jae-hyuk, a researcher at Meritz Securities, explained, “Large-scale mine disruptions and shortages in concentrate supply have tightened copper supply conditions. The sustained low levels of refining fees (TC) also reflect supply pressures.” Kim Yu-min, a researcher at Hanwha Investment & Securities, added, “Due to tariffs and policy uncertainties, copper inventors are shifting to specific regions, distorting short-term supply and demand.”
Courtesy: www.chosun.com