The prices of copper climbed by 15% in November, which was the biggest rise for the metal in 7 years. Experts believe that the prices went up in the usually stagnant market due to the recent demand from China. The country is currently undergoing extensive renovations to its roads. China currently accounts for about 40% of the 23 million tons of copper produced every year.
In light of this growth, leading international agencies have made predictions for 2018 (tip: compare this with InvestingHaven’s copper price forecast 2018). The World Bank predicted in its commodity forecast that the monthly spot price for copper will fall to $4,700 per metric ton from $5,510 in 2015. This forecast is the lowest value that the World Bank had for copper since 2006. Over the next decade, the World Bank suggests that prices may grow to about $7,000 per metric ton.
The International Monetary Fund (IMF), on the other hand, said that they envisage a decline of prices for copper from $4,879 per metric ton to $4,675. They also estimate a decline in prices for copper by 2020.
One of the main benefactors of China’s demand for copper is Chile who produce around 1/3 of the world’s copper reserves. Chile’s Minister of Mining Aurora Williams stated that copper will probably average at $2.95 per pound in 2018.
Williams says that she’s bullish about the price outlook for copper. However, what she’s not optimistic about is the return of copper’s prices to $4 per pound, which was its price back in 2011.
“It’s more important rather than looking at outright prices to look at the trend,” said Williams, adding to her statement that the $3 per pound could be achieved in 10 years if volatility gains traction. “While we are in an environment of higher prices, we remain cautious as we don’t want to lose sight of the achievements and adjustments we made when prices were much lower and costs had to be cut.”
According to Williams, Chile is on track to produce over 5 million tons of copper this year. She also said that future projects involving the metal could make the country’s production increase by 6 million tons in the next 10 years.
Copper futures have made steady increases since the 5% correction that happened at the start of December. Nadex revealed recent speculation regarding the copper futures contract pointing to an article on Zerohedge that said: “Two firms held 40 to 49 percent of copper inventories and short-dated positions, according to Jan. 19 exchange data that shows holdings as a proportion of available stockpiles. While the London Metal Exchange (LME) provides data on the approximate size of large positions, it doesn’t disclose who is behind them.” With this knowledge, analysts say that investors should expect copper to continue increasing in price until the year ends.
Trading.com founder Jack Gleason reviews his plan for the copper market in the video below, and says that he will be watching for potential trading opportunities and covering news that could potentially impact copper in the future.
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