In a historic first, the price of copper has shattered the $12,000-per-ton ceiling, marking a dramatic escalation in a rally fueled by acute supply concerns and robust demand projections tied to global electrification and artificial intelligence.
Record-Breaking Surge and Market Drivers
On Tuesday, copper futures on the London Metal Exchange (LME) jumped by as much as 2%, reaching a peak of $12,159.50 per ton. This milestone extends an extraordinary run that has seen the red metal appreciate by over 35% since the start of the year, putting it on track for its most powerful annual performance since 2009.
The rally is underpinned by a potent mix of factors. Persistent supply anxieties, simmering for years, have boiled over due to a series of tragic operational disruptions at major mines worldwide. These include a fatal accident at Indonesia's second-largest copper mine, an underground flood in the Democratic Republic of Congo, and a deadly rock blast at a Chilean mine, collectively tightening global output.
Simultaneously, the demand outlook remains exceptionally strong. Long-term global trends in electrification, requiring vast quantities of copper for power grids and clean energy infrastructure, provide a solid foundation. Adding a new layer of optimism, investors are betting that the explosive growth of the artificial intelligence (AI) sector, with its massive electricity needs, will further accelerate copper consumption.
Analyst Forecasts: Bullish Targets and Skeptical Voices
Financial institutions are painting a vivid picture of copper's potential future. Analysts at Citigroup project that in a bullish scenario, copper could rally to $15,000 per ton. They cite a softer US dollar and potential interest rate cuts as factors that would enhance the metal's appeal to investors.
Brokerage firm ICICI Direct also expects prices to hold firm and advance, citing tight supplies and strong US demand. "Prices would also get support on growing bets of a fresh round of stimulus from China to counter the slowdown in the property sector," the firm noted in a research report.
However, not all voices are unanimously bullish. Analysts from Goldman Sachs have expressed caution, warning that the recent price explosion is being largely fueled by investor speculation about future shortages rather than immediate supply-demand fundamentals. Meanwhile, Morgan Stanley analysts forecast a supply deficit of roughly 600,000 tons next year, with shortages expected to intensify in the subsequent years.
Impact on Indian Markets and Price Outlook
The global frenzy has directly impacted domestic markets. On Tuesday, December 24, copper prices on the Multi Commodity Exchange of India (MCX) surged by over 1.77% to ₹1,141.45 per kilogram.
Providing guidance for local traders, ICICI Direct stated that MCX Copper December futures are expected to find support near the ₹1112 level and could move higher towards ₹1129. A decisive break above this level might open the path towards the ₹1135-₹1140 range.
As the market watches closely, key economic data from the United States will be scrutinized for further clues on monetary policy direction, which will significantly influence the trajectory of this crucial industrial metal in the coming months.
