Why has the copper market shot up so fast?
The Ukrainian and Russian conflict is causing all of the price gaugings that we have seen since the initial invasion of Ukraine. These world events will generally have significant ripple effects across the markets and commodities, especially when you start to consider the oil effect that we are seeing. These oil prices affect everything, and people/traders get scared or hesitate on where they are going to get the next push of commodities for things like EV stations or simple electronics.
We have seen a massive change in the commodities market the last two weeks, and that is all from the disruptions from Ukraine and Russia. These oil markets have climbed to prices not seen since 2008 (one thing to note, with inflation, the real high of gas would be over $5.00 per gallon, which we are still 17% away from).
How did we get here in the last year?
We have seen a new administration in Washington DC change their energy policies, which has led to one of the significant price increases. With oil and other energy prices increasing (even before the Ukrainian crisis began), we saw copper and other metals growing. Copper prices were increasing as we saw more of a push towards EV vehicles and charging stations, but we have seen the increase due to other factors.
When will it go down?
So we expect to see a market that is going to jump up and down like a kid on a pogo stick for the first time. Sure there will be mini success rates but there are also going to be large stumbles and falls coming down the road. The markets shooting up so quickly is never a good thing because that is mainly based on fear purchasing and not real business reasons.
We see investors that are not even part of the commodity space increasing their interest in copper as it can become a trading tool as other stocks will. While Russia produces between 3-5% of the world’s copper, according to different sources, we do not see this as the factor that propelled the markets forward so quickly.
Copper prices increased 11% ($0.50 per lb) the week of 2/28-3/4, but on Monday, 3/7, we saw a huge market drop of $0.23 within hours of the market opening. These sudden increases and decreases will hurt the market as a whole because they are going to become harder and harder to predict. Investors and consumers like stable markets, and this instability will lead to electronic and auto manufacturers adding additional costs into their new vehicles and products that will ultimately be pushed off towards consumers.
While in the scrap world we like higher metal prices- we do not like the same being said for gas or consumer goods. Without an end date or hard idea on what to do for the metals markets, we may see a roller coaster for quick a bit.
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