Copper advanced another ~1.6% overnight on hopes that global growth will get back on track sooner rather than later. The industrial metal is hardwired into the global economy — construction, vehicles, electronics, and increasingly EVs, which consume significantly more copper than their combustion counterparts. So far in April it’s rallied strongly, with Nymex up ~9%, and the LME not far behind at ~8%. Throwing in another complication, copper is facing significant supply issues this year due to sulphuric acid constraints of all things.
The story behind the surge is worth understanding. China has flagged it will halt sulphuric acid exports, a relatively obscure move with very real consequences. The acid is essential to producing copper cathodes, and Chile, the world’s biggest copper producer, imports a million tonnes of it annually from China. Remove that supply, and roughly one-fifth of Chile’s copper output is at risk. It doesn’t stop there. One-third of global sulphur originates from Middle Eastern oil and gas refining, and some is produced as a byproduct of copper smelting, so China isn’t the only source. But prices are already rising, and if a genuine shortage takes hold, the cost flows quickly and painfully into homes, cars, and consumer electronics.
The bottom line – there is a potential supply shock hiding in plain sight, with China in this case able to pull the lever which pushes prices up.
- We are targeting a test/break of the psychological $US100 level by the COPX ETF in 2026.
