vigilante8arcade| Copper prices have fallen back from high levels, and the market is over? Top traders: Continue to bullish

International copper prices fluctuated sharply after hitting an all-time high, causing market concern.

On May 24th, the main copper contract for LME futures closed at US $10334 per ton, a record high of 11104 since the 21st.Vigilante8arcade.5 US dollars per ton fell by 770 yuan per ton, and the main contract for Shanghai copper also fell from a high of 89000 yuan per ton.

Behind the surge in copper prices is what the market sees as a "huge demand" for copper in the context of the energy transformation, and a massive influx of speculative money, betting that the price of copper will soar to $15000 a tonne.

Notably, Indurain, a well-known global commodities trader and hedge fund manager, believes there is still plenty of room for copper to rise, quadrupling to $40, 000 in the next few years.

The impact of two major factors, the high copper price pullback

Recently, the brightest star in the commodity market, apart from gold and silver, the "Dr. Copper" naturally refused to give way. As an important raw material of modern industry, copper is widely used in electric power, home appliances, construction, new energy vehicles and other industries, which is closely related to people's lives.

Since February this year, copper prices have begun a rising storm, with LME copper futures and Shanghai copper soaring from around $8100 and 67000 yuan respectively. On May 21, LME copper futures hit 11104.5 US dollars / ton, and Shanghai copper main contract reached 88940 yuan / ton, both setting a new record.

However, after the copper price hit an all-time high, the high correction began in the later trading days of the week. As of May 24, the main copper contract for LME futures closed at US $10334 / ton, down US $770 / ton, while Shanghai copper fell 5450 yuan / ton from a high of 89000 yuan / ton.

Some analysts pointed out that there are two main reasons for the decline in copper prices from high levels: first, weak spot demand and low willingness to buy downstream in the face of high copper prices; second, investors' sentiment has been hit by the expected cooling of interest rate cuts by the Federal Reserve.

According to Mysteel, in the face of high copper prices, most downstream buyers choose to wait and see and wait for lower prices to replenish. The recovery of domestic terminal consumption is slow and the process of destocking is slow. The fear of heights still exists in the downstream processing enterprises, and some processing enterprises choose to shut down the furnace without production. Therefore, the overall downstream procurement willingness to enter the market is relatively low, the demand is difficult to have a significant improvement, the basic intra-day delivery to meet the rigid demand-based production.

Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, saidVigilante8arcadeIn the medium to long term, the rally may continue, but in the short term we must respect the fundamentals. We must admit that the recent rally has been driven by financial investors, not by spot traders. We have been looking forward to the support of the metal market from the demand for replenishment as interest rates begin to fall, but the expectation that the Fed will cut interest rates only once this year has dampened some investment interest. "

Top traders are bullish on copper to $40,000

Behind the surge in copper prices, on the one hand, the market believes that the energy transformation in the context of the "huge demand" for copper, especially new energy vehicles. On the other hand, it comes from the influx of speculative money.

According to a report from the International Energy Forum (IEF), an electric car currently needs about 60 kilograms of copper, more than twice as much copper as a conventional internal combustion engine car. Over the next 30 years, the world will have to mine 115% more copper than the historical average before 2018. In order to meet the global demand for power supply for electric vehicles, the number of new copper mines that need to be put into production will be 55 per cent higher than the historical average.

The copper futures markets of the US COMEX and the London Metal Exchange (LME) have attracted $25 billion of speculative bulls, most of which are betting that global copper prices will hit $15000 a tonne in the future, according to a new research report by Citigroup.

Indurain, a well-known global commodities trader and hedge fund manager, is more optimistic. Mr Indurain believes copper prices still have plenty of room to rise as supply struggles to keep up with surging demand, which could quadruple to $40, 000 a tonne in the next few years.

We are moving towards a doubling of copper demand because of the global electrification trend, including electric cars, solar (000591) panels, wind farms, as well as demand in areas such as military uses and data centres, Mr Indurain said.

Mr Indurain's confidence in the copper market is understood to have helped the $1.3 billion commodity self-enhancement fund he manages bounce back from a 55 per cent loss last year. The fund has risen 83 per cent this year, with gains from a wide range of commodities. Indurain is also bullish on other commodities, including aluminium, and believes aluminum prices will continue to rise for reasons similar to copper.

However, Macquarie analysts say the growth in global copper demand is being offset by a slowdown in Chinese demand, and given current fundamental indicators, copper prices seem to have gone too far and the risk of a sharp correction is so high that it has even begun to do so.

Citic Construction Investment Futures also said that from the perspective of pricing logic, copper is still a kind of futures for physical delivery, and its metal properties should not be underestimated. The current industrial demand is weakening, and rising prices limit the diversification of selling roles. It is more difficult to close a transaction at a high price. With reference to the trading performance of partial profit-taking after American Copper hit a new high, Shanghai and Lun Copper are also facing the pressure of bullish decentralized stop earnings after refreshing historical highs.

Responsible editor: tactical constancy

Proofreading: ran Yanqing