On Thursday morning, November 10, we woke up to find copper prices at $2.49 a pound (currently at $2.54). Compare that with the 6-month low, on June 10, when copper was $2.05. In early January of 2016, it was selling at less than $2 a pound for a short period of time. That means prices are now up about 20 percent this year.
The reason for the surge is President-elect Donald Trump, and his campaign promise to rebuild our infrastructure, including airports, roads, and bridges. During the campaign, President-elect Trump compared our infrastructure to “third world countries” and made the promise for a $500 billion effort to update them. In order for that to happen, we are going to need a lot of copper.
Political experts believe the beginning of the infrastructure program will begin in early 2017, which means the price of copper will grow on the speculation that it will have a significant impact. While there is currently an excess supply of copper throughout the world, keep in mind that China has started a three-year, $720 billion infrastructure program, and after taking office last year, Canadian Prime Minister Justin Trudeau started a similar $125 billion project.
Where will the price of copper go? Jeremy Wrathall, the head of global resources for Investec PLC in London, told the website Mineweb, “Everyone had written copper off, and now copper is absolutely motoring. If you start massive infrastructure building, particularly when you start talking about modern smart-grid building, you’re going to have a lot more copper use.”
Meanwhile, TD Securities head of Global Commodity Strategy Bart Malek told Money Talk, “there is institutional interest in copper. So I think if you are looking at everything, you are probably not looking at a very robust interest rate hike environment going forward. At the same time you are looking at a very improved prospect for copper. So it is positive.”
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