“I don’t think [price moves] will be marginal,” Wolf added. “If the price shows signs of going higher, it will move to those levels.”
The expected uptick in Chinese copper demand for 2019 is central to the copper pricing spiking higher, Wolf said.
Meanwhile, a rebound in market sentiment surrounding trade war uncertainties would need to translate into ‘hard data,’ Wolf explained.
“It’s difficult to think that the next move is a downward one,” Wolf said, adding, “We’re seeing domestic stimulus in China and it’s difficult to construct an argument that Chinese demand will struggle this year. The end-of-year projection for me is higher, but the path to that is going to take centre stage.”
The current copper market is drawing parallels with 2016 with regard to global supply growth relative to commodity investment, with a period of 3-6 months where the copper price lags behind [spot market] liquidity, Wolf also highlighted.
Between January and October of 2016, the LME three-month copper price traded in a range of $4,320-5,070 per tonne, before moving up between November 2016 and June 2017 to trade within a range of $5,459-6,811 per tonne.
“We were stuck in a range-bound environment [in 2016], which is similar to current conditions. People tend to become over comfortable in collecting premium, and when the breakout comes people tend to be taken by surprise,” Wolf said.
“In long-time compressed trading environments like that of copper, the move out is usually quite aggressive,” Wolf concluded.
Copper's three-month price on the London Metal Exchange was recently at $6,462.50 per tonne as of 12:09am Central European Time.