The price of %Copper is now at its highest level since the middle of 2022 amid rising concerns over ore supplies and a potential delay in U.S. interest rate cuts.
Copper’s price has risen 5% in the past week on mounting supply worries and is now trading at $9,321 U.S. per ton on the metals market in London, England.
The rise in copper’s price comes as smelters have trouble securing adequate supplies of ore, a key ingredient in the base metal.
Copper smelters in China, which produces more than half of the world’s refined copper, say they are planning to cut production as they cannot acquire enough of the ore they need to operate.
In a research note, U.S. investment bank Goldman Sachs (GS) reiterated its forecast that copper prices will rise a further 65% by 2025 amid supply constraints.
“Large deficits in the second quarter will push the market into backwardation — an indicator of strength — in the second half,” wrote Goldman Sachs’ metals analysts.
At the same time, rising concerns about the U.S. Federal Reserve holding off on interest rate cuts this year is also influencing the price gains in copper.
The latest data shows that futures traders on Wall Street now expect the U.S. Federal Reserve to cut interest rates only two times this year, down from three expected rate cuts previously.
Additionally, most traders now expect that the first rate cut in the U.S. will occur in September of this year. Previously, Wall Street was betting on a first rate cut happening in June.