Industrial metals prices weighed down by trade, demand fears Industrial metals prices weighed down by trade, demand fears Industrial metals prices weighed down by trade, demand fears

Copper supported by green transformation demand, China stimulus and peak rate speculation

Ole Hansen

Head of Commodity Strategy

Summary:  Copper futures in London and New York trade at a 12-week high buoyed by continued China stimulus, US peak rate speculation supporting industry restocking, the renewable energy sector leads consumption higher. Meanwhile on the supply side we are seeing emerging concerns about strike action in Peru and not least the potential loss of 1.5% of global supply related to shutdown warnings at First Quantum’s giant Cobre Panama mine.

Key points in this copper focused industrial metal note

  • Copper futures trade at a 12-week high supported by China stimulus and US peak rate speculation
  • The energy transition is real as continues to drive demand from EV's, solar and grid upgrades
  • A government forced mine closure in Panama may at worst reduce global supply by around 1.5% 

Copper futures in London and New York trade at a 12-week high buoyed by continued China stimulus, US peak rate speculation supporting industry restocking, the renewable energy sector leads consumption higher with better-than-expected demand in China from electrical vehicles, solar panels and the power industry. Meanwhile, the supply side is currently facing the risk of strike action in Peru and not least the potential loss of 1.5% of global supply related to shutdown warnings at First Quantum’s giant Cobre Panama mine.

After once again finding support in the $3.54 per pound area last month, the HG futures contract has returned higher to test strong resistance around $3.83, the 200-day moving average, shown as a 42-week moving average below, and the upper falling trendline from the January high. Meanwhile, RSI closed above 60 on Monday, with the positive sentiment pointing to higher prices. Above, the next key area of resistance can be found around $4.02, the August high while a break below $3.67 would return the market to neutral.

Source: Saxo

Last week the white metal had its best week since July and together with other industrial metals it has been supported by speculation the Federal Reserve’s aggressive rate hike cycle has reached the end of the road. Earlier this year the sector went through a destocking phase amid high interest rates raising the cost of holding inventories while at the same time putting a brake on economic activity.

During the same time however, a better-than-expected demand situation in China helped underpin prices with the latest data provided by Goldman’s showing 10% year-on-year increase so far this year, with green transformation industries continuing to increase demand. A situation highlighted by a drop in China exchange monitored stocks to the lowest level since 2017, in the process offsetting a rise at the London Metal Exchange, which has been dominated by arrivals from Chile and Russia. The copper premium, or the fee traders pay for imported cargoes at the Yangshan port in Shanghai over benchmark prices on the London Metal Exchange, has because of strong demand reached the highest level in a year, according to Shanghai Metals Market.

Looking ahead, the energy transition is real, and it will continue to create a significant amount of demand for some metals, and given the current uncertainty and rising cost of financing there is a risk that sufficient mining capacity will not be developed in time, potentially forcing up prices for in-demand metals with copper, the so-called king of green metals, once again being singled out given the focus on wind, solar, EV’s and subsequent power-grid related demand. 

While the short-term outlook for copper continues to be challenged from the risk an economic slowdown, the lack of big mining projects to ensure a steady flow of future supply in the coming years continues to receive attention from long-term focused investors as it supports a structural long-term bullish outlook, driven by rising demand for green transformation metals and mining companies facing rising cash costs driven by higher input prices due to higher diesel and labour costs, lower ore grades, rising regulatory costs and government intervention, as seen by the current crisis in Panama, and not least climate change causing disruptions from flooding to droughts. 

Copper remains the best performing industrial metal this year, trading up 3% despite all the worries related to the Chinese property sector, and together with lead it has so far helped limit the year-to-date sector loss to around 11%, partly offsetting heavy losses in nickel and zinc.  Speculators, such as hedge funds and CTA’s, have been holding a relatively small net short position in HG copper since August, and with the gross long and short both staying elevated, it highlights the current range bound market which for a while now has not forced any major change in positioning. That status que is likely to be kept until fresh momentum can be established, either below $3.54 or above the 200-day moving average. 

We keep a structural long-term bullish view on copper and with that also copper related mining companies that will benefit from higher prices. 


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.