Copper: a metal on the rise
In recent years, copper has attracted the attention of investors, emerging as an alternative to gold in a context of increasing economic uncertainty. While gold continues to be considered a safe haven, copper is establishing itself as a strategic metal, thanks to its growing demand, especially from China. The current situation of the copper market is characterized by a series of factors that influence its price and availability, making it a topic of great interest to investors
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China and the revival of copper demand
China, which accounts for a significant part of global copper demand, is implementing economic measures to stimulate growth. Despite a contraction in industrial activity, the Chinese government recently announced an economic stimulus package that includes monetary easing and support for the real estate sector. These measures are intended to boost the economy and, consequently, to increase demand for copper, used in multiple applications, from construction to infrastructure. According to Roberta Caselli, an expert at Global X, the stimulus package has been defined as China’s ‘Draghi moment’, underlining the urgency to achieve GDP growth objectives
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The challenges of copper supply
Despite increased demand, the copper market is facing significant supply challenges. Copper production has been affected by various factors, including operational problems in Chile, one of the world’s leading producers. The shortage of available ore and the absence of new investment in mines have led to a situation where the availability of refined copper is limited. Smelting plants, which depend on a constant flow of crude copper, are facing difficulties and may be forced to close if processing rates continue to fall. This scenario could lead to a copper shortage in the coming months, further accentuating price pressure
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Future prospects for the copper market
The outlook for the copper market in 2024 is characterized by some volatility, with large price fluctuations due to exogenous factors. Analysts expect that demand for copper will continue to grow, supported by investments in infrastructure and the transition to renewable energy. However, production growth may not keep pace with increased demand, leading to a potentially deficit market. The International Copper Study Group estimates indicate a global surplus of refined metal in 2023, but this could decrease dramatically in the coming years, making copper an increasingly attractive investment for investors
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