Is copper going to keep rising?

The price of copper has turned higher in the past few weeks. However, many are intrigued as to whether copper prices are going to keep increasing today. Particularly if a supply shortage occurs.

Long-term still looks great for the bulls

Copper prices increased in December 2022 because of low inventories and optimism for recovery following China’s lifting of zero-Covid restrictions. After this rally eventually wore out in January, prices reached a low point on March 16^th. Now that markets are rising in the short term, many analysts question whether the market can continue to withstand short-term adverse pressure.

As estimated by Goldman Sachs, copper will reach a record high in 2023, due to an impending shortage of stocks and rising demand. However, CIBC (Canadian Imperial Bank of Commerce) commodity analysts are somewhat less optimistic about copper. This is taking into account the fact that copper prices are still at all-time highs.

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China eats up 52% of the world’s copper demand. Unfortunately, the country’s rehabilitation after the elimination of Covid has been slower than expected. This indicates that negative pressure may continue to exist in the market.

Copper mining is expanding

In other copper-related news, First Quantum Minerals Ltd and Rio Tinto Ltd will establish a partnership to expand the La Granja copper project in Peru, with the Canadian miner purchasing a 55% stake. Copper’s long-term growth and Teck and First Quantum’s substantial copper holdings could also make them attractive merger candidates.

Bloomberg reported that Brazilian authorities are stepping down on illegal copper mines in the Amazon, as the metal’s high price attracts gold-focused black market players. Earlier this month, fifty agents dismantled illegal mines in Canaa dos Carajas, close to Vale SA’s largest copper mine, Sossego, following two similar operations the previous year.

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There are indications that the metal has been dispatched to China, according to task force commander Ezequias Martins’ press office. The case may result in environmental offenses and criminal association convictions.

Copper has the potential to grow

Copper futures are reflecting a long-term rise. Traders, however, are taking advantage of short-term trading.

Currently, copper futures are bouncing back from previous lows of 3.850. This level is acting as support. In case the bears breakthrough, the longer-term support could be seen at the 200-day average level of 3.740.

The bulls, however, are testing the resistance of 4.1350. They have a strong base, as copper futures have been mostly rising the past few days. in case of breaking through, the 4.250 level could be the next target.

Copper futures 1D chart, source: tradingview.com