Copper: From laggard to potential outperformer – Commerzbank

Commerzbank’s Thu Lan Nguyen notes Copper has turned into a top performer after being one of the weakest metals, pressured by rising LME stocks and mixed supply news. Possible stock sales and a Panama mine restart could cap prices near term, but sharply lower Chilean output suggests supply worries may dominate once growth fears ease, supporting higher Copper prices longer term.

Short term overhang, longer term supply strain

"This morning, copper is one of the top performing metals. This is likely due to the fact that copper had previously been one of the worst performing metals. On the one hand, this can be explained by the fact that the red metal is considered highly cyclical. On the other hand, there were also fundamental reasons for its price weakness: LME stockpiles have risen significantly since mid-January and are now at their highest level since 2018."

"At the same time, supply prospects remain mixed. Adding further downward pressure to prices was the news that the government in Panama will soon allow the sale of stockpiles from a mining company whose copper mine was closed in 2023."

"Additionally, the government plans to decide in the coming months whether operations at the mine could be resumed. A decision is expected by June."

"More significantly, the mining production in Chile, the world’s top producer, is struggling. In February, monthly production fell to its lowest level in 10 years."

"This suggests that, once current economic concerns subside, supply worries are likely to take over again in the longer term, pushing prices further upward."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)