Copper’s prices have been underpinned by a number of factors recently even as equity markets have tumbled into the end of last week. Below are some of the factors that have been encouraging copper buyers over the last few weeks:

• The first reason has been the weakness in the Dollar Index. The USD has been weak on large levels of Fed stimulus and virtually unlimited QE. This weak dollar helps boost commodity prices including copper.
• There are general supply concerns from the top Copper producer Chile. As long as supply is restricted from South America this helps support copper prices.
• There has also been a pronounced drop in copper stockpiles as noted in London Metal Exchange tracked sheds and copper holdings have collapsed to their lowest levels since 2005. Looking at outstanding orders to remove metal they haven’t bottomed out just yet.
• China has been increasing its infrastructure spending after the fall out from COVID-19 induced shutdowns and this has also been helping copper demand. Investors are generally gaining in excitement over copper with
• Citi just laying out a bull case for prices at $8000/ton. Alongside these CFTC figures show longs are increasing.
• There are also some bright copper-positives out there. The US housing starts which have been doing well are positive for copper as a home building needs copper.
• Furthermore, there is also a growing rise in green technology. This will be copper positive due to the very high demand for copper in green technology.

This makes a very good case for medium-term copper buyers. In terms of where to join this move price is already quite extended to the upside, so look for buyers on pullbacks. The main risks to this outlook are if we see a sharp reduction in demand on COVID-19 second spikes and related lockdowns. Also, if Chile’s copper supply picks up sharply this will also weigh on copper prices.