Axe_Olga/iStock via Getty Images
Copper (HG1:COM), (COPX), (CPER) started the year up 30% through May 20, but later dropped 13% since then.
However, the fundamentals have not changed for the commodity, “financial speculators were a bit too optimistic to start the year and pushed prices beyond base fundamentals,” analysts, headed by Mason Mendez, investment strategy analyst, and John LaForge, head of real asset strategy, wrote in a Wells Fargo Investment Institute note.
At around $9,600 per ton or $4.42 per pound, copper prices seem “about right based on current fundamentals,” they said.
According to the Commodity Futures Trading Commission, financial speculators turned “extremely bullish” on copper (HG1:COM), (COPX), (CPER) early in the year, hoping that China’s manufacturing sectors would show improvements soon.
China accounts for 56% of the total copper purchases globally.
Wells Fargo Investment Institute analysts are “neutral” on copper (HG1:COM), among other industrial metals. The overall global manufacturing is still positive and has improved from 2022 and 2023.
“Also, the long-term fundamentals look solid, driven by positive trends in areas such as green energy, AI, and digital assets,” analysts said.