Copper is enjoying the wrong kind of bull market

In commodities, there are two kinds of bull markets: good ones, driven by strong demand, and terrible ones, powered by supply shocks. The former are typically more durable, requiring higher-for-longer prices to encourage investment in new supply; the latter often prove short-lived.

The copper market has witnessed both kinds over the past 25 years, with prices rising to a record high of $US11,104 per metric tonne last year from $US2000 in 2000. Often the factors were so intertwined that it was difficult to discern which was more important. Right now, however, it’s very clear: it’s a supply issue.

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Bloomberg Opinion