‘Party over’ for copper, prices fall notably following Monday’s record high

So far on Thursday, copper has fallen to a low point of $10,210 per tonne, down by 8% from the record high on Monday.

The decline was not unexpected, however, and a number of market participants have told Fastmarkets that they felt the initial move up was unsustainable, with some suggesting that hedge funds and financial investors had inflated the price beyond its fundamentals.

“I think that the copper price is wildly overinflated. There is so much tourist money it’s insane. Hedge funds have rolled into coffee, rolled into cocoa and now into copper. Maybe they’ll roll into cobalt next if it has to start with a ‘c’,” a trader source told Fastmarkets.

Coffee and cocoa prices on Intercontinental Exchange contracts pushed up over the first four months of 2024 and peaked in April – with coffee up by 29% on April 17 and cocoa up by 179% on April 19. Since those peaks, the contract prices have moved down again – by 14% for coffee and by 37% for cocoa, with sources saying this decline was due to funds removing money from the prices.

The same pattern has now happened with copper, with one trader telling Fastmarkets the current trend down “seems like profit taking.”

“Profit-taking has accelerated in the copper market amid the risk-off tone across markets,” ANZ commodities strategist Daniel Hynes said.

Earlier in the week sources had told Fastmarkets that they were worried that copper prices would fall back down having pushed up too fast.

“The party’s over, the funds are going to put their money back in stocks, such as Google and Amazon,” one producer source told Fastmarkets on Thursday.

Several sources said they did not believe the hedge funds had a strong understanding of the copper market and were not surprised that prices have now come off, with the funds now profit-taking.

“[The spike in prices was due to] idiots putting other peoples’ money into stuff they don’t understand,” the producer source said.

Despite the massive drop in prices since Monday’s high, sources told Fastmarkets that tight concentrates supplies and increasing demand meant that copper’s fundamentals probably do support stronger prices.

Despite copper’s decline since hitting the record high this week, the red metal’s price is still 22% higher than it was at the start of the year.