Commodities Market Review: Copper Price Soared to a Four-Year High

Starting from June, industrial metals, especially copper, have been the big movers in the commodities market. On June 8, the LME Copper soared to $7261.5 per ton, reaching its highest price since January 2014. The price of copper is essentially determined by the supply and demand relationship as well as the broad economic factors, such as interest rate, economic and political environment. The recent copper market volatility was primarily created by the significantly increasing demand from Asian countries, worries about drop in supply due to workers’ wage talks in Chile and Peru, and the rally of dollars.

(Source: Quandl)

Started from China’s Rising Demand

As the world’s top 1 copper consumer, China is always one of the biggest drivers of copper’s price. According to China’s custom data released for this May, the value of imported raw materials is surging and the import quantity of unwrought copper rose by about 22% from a year earlier. Moreover, based on Reuters statistics, the volume for refined copper and concentrate imports has reached a momentum since a decade ago. China’s shortage and hence boosting demand in copper pushed up its price in the first place.


Fired up by Escondida Union’s Labor Negotiations

Escondida, the world’s largest copper mine, produces and supplies about 5% of the gross primary copper across the globe since 1990. As a result, its impact on the entire global copper supply chain is substantial. Labor issues have been a great problem for this copper mine and its part-owner BHP for a long time. Last year, the 44-day strike at Escondida, the longest in Chile, has directly led to a loss of 156,000 metric tons of copper production in the market. This year, the workers has started a new round of salary negotiations with BHP, requiring for a one-time bonus equivalent to 4% of BHP’s dividends paid out in 2017. While BHP would respond upon the end of this week, a quick resolution is not expected by the public. Therefore, market’s fears concerning the potential significant cut of copper supply amount further drove up the price to a historically high level.


Supported by Stronger U.S. Dollar

The US dollar surged early this month as the uncertainty on Euro arose due to political events happened in Europe. The stronger dollar is considered to be another contributor to the rally in copper since industrial metals would become more expensive for foreigner buyers.

I Know First’s Successful Forecast

On June 5, I Know First algorithm issued a bullish forecast on CME_HG1, a copper future contract. Over the 3-day trading period from June 5 to June 28, CME_HG1 gained the highest returns of 5.33%.

This bullish commodities forecast was sent to the current I Know First Subscribers on June 5, 2018.


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Please note-for trading decisions use the most recent forecast. Get today’s forecast and Top commodities picks.

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