We might want to fasten our seat belts. Copper is taking all of us on a pretty bumpy ride this week.
The journey really started on Friday, June 18, when China announced it wants more control over the price of copper, so it released an unknown amount of it’s reserves and began selling. That dropped the price of copper from a high of $4.34 a pound on Thursday, June 17 to a close of $4.15 a pound on Friday. The copper price per pound hadn’t been that low since April 19th of this year. While China’s effort certainly helped that country’s supply, it also meant buyers in other countries would want to take advantage of the suddenly lower prices.
And then they did.
On Monday, June 21, the rebound began. While the increase was slow at first, copper prices rose nearly 1% to close at $4.19 a pound as investors began to realize that inventories will remain low while demand stayed high. Analysts immediately began to speculate that the price would quickly return to the $4.40 to $4.45 range quickly. But that hasn’t’ happened yet.
By Tuesday, June 22, a rebound began. After reaching a daily high of $4.25 a pound, the price settled at $4.23 for the day. Fed Chair Jerome Powell told Congress that afternoon that he still sees no reason to raise interest rates before 2023, and investors reacted with the believe the economic recovery plans will continue, which will increase the demand for copper.
Reaction was strong on Wednesday, where the price of copper jumped nearly three percent to close at $4.33 a pound. Which means after a volatile 5 days, the $4.34 a pound price on Thursday, June 17 was pretty much the exact price as it was on Wednesday, June 23. It just took an interesting path the stay the same.
Analysts remain confident that demand for copper through this year will remain high, while output will not increase over the next 5 months. That should lead to prices remaining about $4 throughout 2021, with some analysts believe that price could remain through 2022.