Goldman Sachs The Markets
Why copper is hitting record highs
May 24, 2024
Exploring the recent surge in copper prices to record highs and the factors behind it such as arbitrage trading and high demand from electrification needs. Analyzing the future outlook for copper prices and the evolving demand dynamics driven by electrification and global IP. Touching on supply challenges faced by mines and the importance of monitoring China's weekly inventory data for price stability.
08:07
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Quick takeaways
- Copper prices surged due to US-London exchange trade and arbitrage opportunities.
- Factors like underinvestment in mine supply and electrification demand contribute to high copper prices.
Deep dives
Rising Copper Prices and Market Dynamics
Copper prices have surged to all-time highs due to a concentrated trade between the US and London exchanges. This trade involved an arbitrage where people sold copper in the US and bought it in Europe and Asia, leading to a price differential that investors aimed to profit from. Factors contributing to the price surge include structural underinvestment in mine supply and increasing demand from electrification projects like electric vehicles and solar panels.
