Outlook for the copper market: new funds continue to flow in, and the green energy industry becomes the follow-up driving force for the rise in copper prices

        With the significant increase in copper prices, traders increasingly agree that liquidity is the main force driving copper prices.

        Citigroup stated that the net long order of speculative funds in the copper market hit the highest level since 2014.

        This may indicate that the fund holdings are already heavy. Citibank analysts pointed out that the trend of copper prices is stronger than that of non-futures products such as manganese and molybdenum, which also proves that the rise in copper prices is driven by investors.

        Citigroup analysts said that because the spot market indicators outside of China are generally still weak, and there is no sign of global supply shortage, it may be said that the increase in investment funds has boosted the rise in copper prices.

        Of course, this does not mean that new funds entering the copper market cannot push copper prices to a higher level. As central banks release unprecedented liquidity to combat the impact of the COVID-19, historical position data may no longer be relevant.

        Mark Hansen, CEO of Concord Resources, said that the power of green energy industry development is very important. Once these industries gain momentum (copper will soon have this momentum because copper is an important metal raw material for various power installations), short-term fundamentals may become irrelevant.

        The price of copper, regarded as a barometer of growth, hit a seven-year high of US$7489.00/ton last Friday, rising for the fourth consecutive week, while gold fell for the third consecutive week. This puts the ratio of these two metals at the highest level since July 2019.

        Paul Robinson, executive director of the International Copper Research Group (CRU), a research institution, said that although the world economy still looks likely to face many challenges next year, he continues to be optimistic about copper because the copper market continues to face a decline in supply, and the demand for copper from emerging industries remains exuberant.

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