Copper Prices Surge to Record High Amid Short Squeeze and Tighter Market Bets

Copper Prices Soar to Record Highs Amid Market Optimism

Copper prices witnessed a significant surge in Asian trading on Monday, reaching unprecedented levels. This increase was fueled by a short squeeze on the Comex exchange and expanding expectations of a tighter market in the coming year, which led to heightened purchasing of the metal.

On the London Metal Exchange, copper climbed 0.8% to an all-time high of $10,848.50 per ton, while prices rose 0.9% to $5.1370 per pound, nearing record levels.

The red metal’s remarkable ascent in recent weeks has been driven by growing optimism surrounding prospective interest rate reductions this year, along with stimulus initiatives from China, the largest copper importer. Additionally, speculation about dwindling supplies, driven by production cuts from refiners in China and stringent sanctions on Russian metal exports, has further propelled copper purchases.

A significant contributor to the copper price increase was a short squeeze on the Comex Exchange last week, where a surge in long-term copper contract purchases led to price spikes and unsettled many short positions. U.S. copper futures, in particular, soared last week due to this squeeze, prompting traders to scramble for copper supplies for future delivery.

Long positions in copper have been buoyed by expectations that diminishing mining outputs will struggle to meet increasing copper demand in the years ahead, especially with the global transition towards green energy and electrification.

Moreover, the recent stimulus measures implemented in China have reinforced bullish sentiments. The country has substantially eased restrictions in its property market to revitalize the sector and initiated a substantial bond issuance, amounting to 1 trillion yuan ($138 billion), further supporting the copper market.