Copper futures climbed to a record high above $6.60 a pound early Wednesday as supply disruptions, tightening inventories and booming AI-related infrastructure demand fueled a rally in the metal and the United States Copper Index Fund (NYSE:CPER).
The ETF, which tracks the copper futures contracts on the COMEX exchange, surged to a new record high of $40.46 on Tuesday. It has risen 15.7% since the start of the year and nearly 10% over the past month.
With assets under management of $735.9 million, CPER trades in an average daily volume of 727,000 shares and has a steep expense ratio of 1.06%.
Copper Price Surges
In a Tuesday post on X, The Kobeissi Letter said copper prices are now up roughly 75% since October 2023 and more than 40% over the past 12 months. “The surge comes amid tight supply, declining inventories in China, and surging demand for data center construction,” according to the letter.
Global Supply Disruptions
The letter said that the supply disruptions at the world’s second-largest copper mine in Indonesia are driving the copper prices higher. Freeport-McMoRan Inc. (NYSE:FCX) said Monday it still expects Indonesia’s Grasberg copper mine to return to full production by the end of 2027.
Concerns over global supply disruptions are also highlighted by billionaire investor Robert Friedland, who warned about the potential ripple effect from the closure of the Strait of Hormuz. He emphasized that such disruptions could lead to a shortage of critical precursor materials, notably sulphuric acid, which is essential for copper production and agriculture.
China Export Surges
China’s exports surged 14% year-over-year in April, driven in part by strong shipments of clean-tech products and industrial components that require large amounts of copper. This has intensified the already tight copper market, according to the letter.
Benzinga Edge Stock Rankings indicate that CPER maintains strong pricing trends in the short, medium and long term, with a strong Momentum score in the 81st percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.
Photo courtesy: Ziadi Lotfi via Shutterstock
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