Copper Prices are set to hit £6500 per ton

Friday 05 March 89833 Shares

Copper Prices are set to hit £6500 per ton

The price of copper has a special (read: strategic) meaning in the context of markets. It is associated with the state of the economy, acting as a barometer of economic strength, hence its alias “Dr. Copper.” What is our copper price forecast for 2017? That is a great question, but not an easy one to answer.

Intuitively, one would say that copper would go lower in 2017, with so many unknowns and problems in the world. Think of geopolitical tensions, hardly an economic growth in developed markets, declining employment participation rates, and the likes.

Financial institutions and media have a slightly consistent view as their 2017 forecasts are neutral to bearish:

As always, we rely on charts for our forecasts. We believe the very long term copper chart is helpful to answer above question.

Though copper tends to move in a very volatile way, we consistently see that copper prices have historically traded above or below £3.60. Until 2004, copper was trading below that price level, while that changed after 2004.

In 2017, we believe that the price of copper can do two things:

Fall towards the £3.60 level.
Rise from here onwards.

The line in the sand is the rising trend line which comes in at £2.10 currently (it will be at £5.25 in the summer of 2017). In other words, as long as the copper price remains above that trend line, we believe the price of copper will go higher or stabilize in 2017. However,