A bet on copper has paid off. But what can investors expect now that prices are soaring? (2025)

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The argument in favour of copper was straightforward when the commodity was in the doldrums last year: Copper is integral to a lot of modern pursuits, from AI to electrification to green energy, so it was just a matter of time before an investment would pay off.

But with copper prices soaring this year, can investors hope to squeeze more out of the now-hot sector?

Copper futures trading on the New York Mercantile Exchange rose to a record high, above US$5 a pound in mid-May, for a gain of 34 per cent this year.

Even though the price has since backed off, to US$4.77 a pound Thursday, copper has easily outperformed gold, crude oil and even the S&P 500 so far in 2024.

Naturally, the shares of copper producers are tagging along, given the prospect of soaring cash flows in the quarters ahead.

Freeport-McMoRan Inc. FCX-N, a popular go-to name because of its relatively low-cost production and its gargantuan size, is up 20 per cent this year.

No wonder. The miner estimates that for every 10-cent increase in the price of copper, its EBITDA – or earnings before interest, taxes, depreciation and amortization – will climb by US$430-million by 2025 and 2026.

The difference between copper priced at US$4 a pound and US$5 a pound, then, implies that this measure of cash flow will rise US$4.3-billion by next year. Given that Freeport-McMoRan’s reported EBITDA was US$9.5-billion in 2023, that’s a 45-per-cent increase.

Smaller producers, which can be more sensitive to shifting commodity prices, have embarked on even larger rallies. The share prices of Ivanhoe Mines Ltd. IVN-T and Lundin Mining Corp. LUN-T, for example, have risen 47 per cent this year.

“The year-to-date rally marks the beginning of copper’s second secular bull market this century, with copper miners set to print massive margins for the next 2-3 years at least,” Maximilian Layton, an analyst at Citigroup, said in a note this week.

Copper’s new glow follows better-than-expected global economic activity, as fears of recession fade and China supports its own growth with fiscal stimulus measures.

But there’s more going on here. Copper supply is notoriously slow to respond to rising demand, given the enormous regulatory hurdles and high costs associated with developing new mines.

That means copper producers could struggle to feed an increasingly copper-hungry economy as countries modernize their electricity grids, expand their fleets of electric vehicles and build the data centres that tap into artificial intelligence.

“I think the long-term picture is well-understood to be fairly constructive, so I don’t think that we’ve necessarily seen the highs” for copper, said Shane Nagle, an analyst at National Bank of Canada, in an interview.

Full disclosure: I sold my Lundin Mining shares in mid-March, booking a gain on my original investment years ago but missing out on … oh dear, another 20 per cent since I sold.

Nonetheless, I’m not alone in expecting a few bumps now that the price of copper is reflecting an increasingly optimistic outlook that might be ignoring several headwinds.

As Mr. Nagle pointed out, political views may be shifting away from green energy expansion at a time when new copper projects are coming online.

High mortgage rates are hampering the U.S. housing market, another big consumer of copper. China’s property market is imploding. EV demand, at least in North America, appears to be fizzling.

What’s more, some observers aren’t so sure that copper’s rise is signalling economic strength, which challenges some of the immediate demand assumptions for the economically sensitive commodity.

“I’ve always found that there is a pretty good correlation between the price of copper and the price of oil. If they’re both going up, it’s telling me that the global economy is doing well,” said Ed Yardeni, president and chief investment strategist at Yardeni Research, in an interview.

Right now, though, the two commodities aren’t in sync: Crude oil has slumped 11 per cent since early April, and the price is up just 6 per cent over the past year, lagging copper by 26 percentage points.

Mr. Yardeni’s conclusion: “It looks to me as though copper is overextended relative to global economic activity.”

Already, we have seen signs of a potential shift in investor sentiment. Copper prices fell 6 per cent Wednesday, and Freeport-McMoRan’s share price sank almost as much, highlighting a risk in joining the copper rally at its current heights.

Copper has a lot going for it. But it’s a lot easier to get enthusiastic about the commodity when it is out of favour.

A bet on copper has paid off. But what can investors expect now that prices are soaring? (2025)

FAQs

Are copper prices expected to rise? ›

Copper prices are rising in 2024. Find out more about the strong fundamentals supporting its rally and experts' outlooks on how high copper could go this year. Copper is the third most-used metal in the world, and experts believe demand for this important commodity is set to rise in the coming years.

Why is copper becoming so expensive? ›

This cost surge is the result of labor wage hikes, increasing transportation costs and greater interest in alternative energy techniques that incorporate copper. Copper price volatility is likely to continue throughout 2023.

Will copper prices rise in 2024? ›

S&P Global's copper market forecast for the 2024/2025 period sees the price of copper averaging US$4.05 per pound, or US$8,928 per MT, in 2024; in 2025 it's then seen increasing to US$4.24 per pound, or US$9,347 per MT.

What do copper prices indicate about the economy? ›

This makes copper prices a good leading indicator of the economic cycle. For example, if orders for copper are being canceled or delayed, the price will drop. This can be a leading indicator that an economic recession is at hand. Conversely, if orders for copper are rising, the price will go up.

What is the prediction for the price of copper? ›

In its copper price forecast 2025, BMI projected copper to average $9,400/ton, up from $9,200 in 2024. ANZ Research also saw copper could trade higher at $9,929/ton in 2025, up from $9,245 in 2024. For next year, ING expected the green metal to trade at around $9,950/ton, up from the projected $9,535 in 2024.

Is copper a good investment now? ›

Copper is an essential metal that is used in a wide range of industries, from construction to electronics. As such, the demand for copper is expected to remain high in the long term. Investing in copper can be a way to gain exposure to this growing demand.

Is there really a copper shortage? ›

There is a problematic scarcity looming for one of the world's key elements, as recent reports indicate that copper is facing a pending shortage. While this may not sound consequential to the average person, experts have expressed significant concerns.

Why is copper trading so low? ›

“People are very pessimistic about the property market.” Copper hit a record above $11,000 just last month, but has rapidly retreated due to worries about rising global inventories and signs of weakness in China.

Is copper worth owning? ›

Copper does have extreme value in construction industries, which is why scrappers will commonly strip wiring of its copper to resell it. While copper is not the most common precious metals investment, it can still be a valuable part of your investment portfolio.

What is the highest copper price ever? ›

Historically, Copper reached an all time high of 5.20 in May of 2024. Copper - data, forecasts, historical chart - was last updated on August 8 of 2024.

Is copper going to $15000? ›

Copper is the new oil, and prices will soar 50% to $15,000, analyst says | Fortune.

Is copper going to boom? ›

Copper Prices Hit New Record High in May 2024

In May, the global economy witnessed the highest surge in copper price history. Copper prices surpassed their previous record of $4.94/lb in March of 2022 to a whopping $5.20/lb in May of 2024.

Why is copper price soaring? ›

The surge in copper demand is driven by its pivotal role in renewable energy generation, electric vehicles, and grid infrastructure crucial for achieving net zero emissions.

What happens to copper prices in a recession? ›

During the 2008 recession, copper prices dropped to US$1.30. This is compounded by the larger cyclical nature of the economy, which also applies to copper.

Why is scrap copper going down? ›

And over the past six weeks or so, the price of copper has fallen more than 10% — looks like the economy is heading for a slowdown. The story with copper, simply put, is too much supply and not enough demand. China, which uses half the world's supply, is a big part of that story.

What is the highest price copper has ever been? ›

The price of copper reached its highest recorded price of US$5.20 per pound, or US$11,464 per metric ton, on May 20, 2024. How did it get there?

What is the forecast for copper supply? ›

As Refinitiv data estimated, copper supply is expected to increase about 4% in 2022. Correspondingly, CRU Group also predicted 4.3% growth, helped by new projects and a recovery in production at the world's largest copper mine Escondida.

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