Is the record run for copper over?

It’s been a good year to cash in those copper pennies! Copper reached an all-time high in May of this year, climbing to $4.762 a pound. While prices have begun to level off from their Q2 peak, some experts suggest that prices could climb even higher.

Record high prices eased a bit in June as big players in Chilean mining resumed operations. The Escondida and Spence copper mines account for almost 1/5 of the annual copper output in Chile – by far the world’s largest copper exporter. Labor strikes at these mines decreased output and impacted pricing of the red metal from the supply side. All this while global economies were ramping back up from declines seen during the height of the COVID-19 pandemic.

In June, China announced that it planned to release national reserves of major metals, with a goal to stem the rally in commodity prices brought on by a global economic recovery. This news helped ease copper prices downward from the record highs reached the month before. In early July, Beijing auctioned additional state stockpiles of copper, aluminum, and other commodity reserves to help raise supplies, according to The Wall Street Journal.

However, the additional Chinese reserves that were released to the market have been smaller than expected and these are merely temporary measures. All the fundamentals of a tight copper supply and an increasing demand outlook remain. For this reason, analysts are cautioning that copper and other commodities could climb back up to the record-high levels that we all saw in late Spring.

On the demand side of the equation, refined copper was up 4.5% in the first four months of 2021, with reports of China’s usage increasing by around 9%. For context, refined copper usage began to recover in the second half of 2020 but still remains below pre-pandemic levels in most countries, according to the International Copper Study Group (ICSG). Clean Energy, electrification, and global economic recovery are all contributing to demand increases.

As for where copper prices are headed, industry analysts are finding it hard to forecast. Still, most agree that the signs are there that the price of copper could ascend even higher than the record levels that we saw earlier in the year. With booming demand and limited potential for a large supply response, all signs point to those pennies in your pocket being worth more and more.