Copper-related exchange traded products are rallying, with copper prices touching on their highest level since July 2015, as investors anticipate greater demand out of China and increased infrastructure projects under president-elect Donald Trump.
On Tuesday, the Global X Copper Miners ETF (NYSEArca: COPX), the sole U.S.-listed copper miner-focused ETF, jumped 4.3% and iPath Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) rose 1.1% as Comex copper futures gained 1.1% to $2.554 per pound. COPX advanced 19.1% and JJC surged 22.8% over the past month.
Supporting the rise in copper prices, investors have grown more optimistic on continued stimulus in China, the world’s largest copper consumer, reports Henry Sanderson for the Financial Times.
The Cesco copper conference in Shanghai last week projected Chinese demand to rise between 3% to 5%.
“Copper has seen a dramatic shift in outlook over the last couple of months which has resulted in significant shifts in futures positions,” analysts at Investec told the Financial Times.
Observers also anticipate demand to rise in the U.S. where Trump has promised to enact fiscal stimulus and expand the country’s infrastructure.
[related_stories]“Speculators are piling into the long side of the market,” Phil Streible, a senior market strategist at RJO Futures, told Bloomberg. “There’s speculation as far as how infrastructure will play out in the new presidential role. It will get the aggressive buying coming back in. Copper may resume its rally up to the most recent high.”
Meanwhile, supply looks balanced in September, compared to a surplus of almost 135,000 metric tons in August. ING argued that the market’s small surplus could continue to narrow during the remainder of the year from stronger manufacturing PMI data out of China. Goldman Sachs also pointed out that purchasing managers’ indexes strengthened in all major regions in October.
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Global X Copper Miners ETF