Copper, Aluminum, and Zinc Prices Soar Amid Supply Disruptions and Surging Demand

Copper, aluminum, and zinc prices surge to multi-year highs in 2024 due to supply disruptions and increased demand, while gold and silver prices pause. The article explores the implications for the global economy and the transition to green technology.

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Aqsa Younas Rana
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Copper, Aluminum, and Zinc Prices Soar Amid Supply Disruptions and Surging Demand

Copper, Aluminum, and Zinc Prices Soar Amid Supply Disruptions and Surging Demand

Copper, aluminum, and zinc prices have surged to multi-year highs in 2024 due to a combination of supply disruptions and increased demand, while gold and silver prices have temporarily paused their upward trajectory. The closure of the Cobre Panama mine, one of the world's largest open-pit copper mines, has reversed the global supply of copper concentrate to a deficit this year, providing strong support for copper prices.

Copper prices on the London Metal Exchange have rallied to a two-year high near $10,000 per ton, up nearly 15% since the beginning of the year, driven by investor optimism over a global recovery in manufacturing and the prospect of tightening mine supplies. However, the recent price rally has dampened demand in China, the world's largest copper consumer, leading to higher inventories and investors paring back long positions to lock in profits.

Fabricators of copper tubes and wires in China are struggling to pass on higher costs to their customers, with the Yangshan copper premium, a key measure of Chinese copper demand, falling to zero. This indicates that global prices are not balanced with what buyers in the biggest market are willing to pay. Industry experts cite weak demand from fabricators, swelling Chinese stockpiles, and a slump in the Yangshan copper premium as signs of softer demand.

Why this matters: The soaring prices of copper, aluminum, and zinc have significant implications for the global economy and the transition to green technology. These metals are essential components in various industries, including construction, electronics, and renewable energy. The supply disruptions and increased demand emphasize the challenges in meeting the growing needs of a rapidly industrializing world while navigating geopolitical tensions and market fluctuations.

The London Metal Exchange has also moved to stop traders from taking Russian aluminum, copper, and nickel from its approved warehouses and returning it at a later date to profit from rule changes to comply with new sanctions. Other metals like zinc and tin have also seen price increases, with zinc up 1.1% and tin rallying 1.9% after a 7.4% slump in the previous session.

As the bull market in copper faces a test, the ability of fabricators to pass on rising prices to consumers is seen as a key factor in determining its sustainability. "The recent 5% mini-correction on Wall Street is likely not the last this year, and stocks may face higher earnings and interest rate hurdles in the second half of 2024 if investors' bullish expectations are to be met," according to market analysts. The complex interplay of supply disruptions, geopolitical tensions, and shifting demand patterns continues to shape the trajectory of metal prices in 2024.

Key Takeaways

  • Copper, aluminum, and zinc prices surged in 2024 due to supply disruptions and demand.
  • Copper prices hit a 2-year high of $10,000/ton, but demand in China has weakened.
  • Supply chain issues and geopolitical tensions continue to impact metal prices.
  • The ability of fabricators to pass on rising costs is crucial for copper's sustainability.
  • Stocks may face higher earnings and interest rate hurdles in H2 2024.