An unexpected drop in global copper supplies has left fund managers rethinking copper prices amid uncertain supplies and predicted shortages. Prior to the sudden drop in copper supply, experts predicted a market surplus that would last well into 2024 and support the steady increases in copper demand as the EV and green-energy industries grew.
However, the closure of a major mine in Panama and reduced copper production by South American miners have cost the global supply an estimated 600,000 tons of copper and have plunged the market into a potential supply deficit. First Quantum’s Cobre Panama mine had to shut down when the Panama government ordered its closure after the Supreme Court ruled that its mining license was unconstitutional, instantly cutting projected supplies by around 350,000 tons annually. Furthermore, Vale lowered its production guidance by 100,000 tons through 2026 while Anglo-American cut its guidance by 180,000–210,000 tons in 2024 and 150,000–180,000 tons in 2025.
The news sent shock waves around the world as companies in several critical sectors found themselves looking at a potential deficit they hadn’t accounted for in their planning. With demand for copper poised to increase due to the growing renewable-energy and EV sectors coupled with the possibility of real estate recovery in China, the global supply chain could face significant demand pressure in only a few short months, especially if the market is hit by another unexpected drop in projected supply.
Consequently, fund managers have begun reducing their bets on lower copper prices as the market adjusts to the sudden drop in expected supply and reassesses the metal’s supply dynamics. Money managers are shifting their positions to marginally net long on both CME and London Metal Exchange contracts. This shift began in late October when the London Metal Exchange three-month copper looked like it would reach lows of around $7,867 to $7,871 per ton after breaking down through key technical support.
However, the anticipated collapse didn’t occur, and copper prices at the LME recovered to $8,530, triggering a shift in stance among short-term momentum funds. This effect was magnified even further by expectations of the U.S. Federal Reserve putting an end to its tight monetary cycle and signals pointing to copper supply being less robust than previously expected.
While money managers collectively took net short positions on CME copper at 21,553 contracts as October drew to a close, the recent Commitment of Traders Report indicates that they have moved to a collective net long of 6,866 contracts. The report points to a significant reduction in outright short positions of 46,558 contracts down from 76,717 contracts but found there was little change in the number of outright long positions.
Exploration companies such as Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) have a major role to play to ensure that the future supply of copper on the global market is assured. Otherwise, many industries could grind to a halt as the supply of this needed metal dwindles.
NOTE TO INVESTORS: The latest news and updates relating to Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) are available in the company’s newsroom at https://ibn.fm/AZMCF
About MiningNewsWire
MiningNewsWire (“MNW”) is a specialized communications platform with a focus on developments and opportunities in the Global Mining and Resources sectors. It is one of 60+ brands within the Dynamic Brand Portfolio @ IBN that delivers: (1) access to a vast network of wire solutions via InvestorWire to efficiently and effectively reach a myriad of target markets, demographics and diverse industries; (2) article and editorial syndication to 5,000+ outlets; (3) enhanced press release enhancement to ensure maximum impact; (4) social media distribution via IBN to millions of social media followers; and (5) a full array of tailored corporate communications solutions. With broad reach and a seasoned team of contributing journalists and writers, MNW is uniquely positioned to best serve private and public companies that want to reach a wide audience of investors, influencers, consumers, journalists and the general public. By cutting through the overload of information in today’s market, MNW brings its clients unparalleled recognition and brand awareness.
MNW is where breaking news, insightful content and actionable information converge.
To receive SMS alerts from MiningNewsWire, text “BigHole” to 888-902-4192 (U.S. Mobile Phones Only)
For more information, please visit https://www.MiningNewsWire.com
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
MiningNewsWire
Los Angeles, CA
www.MiningNewsWire.com
310.299.1717 Office
Editor@MiningNewsWire.com
MiningNewsWire is powered by IBN
