Copper Squeeze: Prices Soar Amidst Physical Shortage

Copper prices have been on a tear since late June and early July, reaching their highest daily levels in January. This surge is due to a growing 'squeeze' on London contracts and a fierce battle for physical delivery.

The bull market for copper continues despite disappointing data from China's economy, which accounts for about 50% of the world's total demand for this raw material. Chinese retail sales grew by only 0.6% y/y against an expected 1.5%, while industrial production slowed to 4.5% y/y and new home prices recorded a 3.2% y/y decline.

Despite these weak economic indicators, copper is becoming increasingly important in the ongoing energy transformation and artificial intelligence. Its price has deviated significantly from the 5-year average, with an extreme deviation of +3.31σ above it. This is mirrored by other industrial metals like gold (+3.13σ) and silver (+2.95σ), which also maintain a strong position as safe havens against global geopolitical and economic risks.