TD Securities’ Senior Commodity Strategist Daniel Ghali reports that copper prices have nearly fully recovered from losses incurred during the Iran war, despite significant investor liquidations and weakening risk assets [1]. Ghali attributes this resilience to persistent hoarding behavior, which he compares to patterns observed during previous geopolitical conflicts such as the Russia-Ukraine war [1]. He emphasizes that unencumbered copper inventories are at unprecedentedly scarce levels, citing factors such as metal locked up from consumption in China's State Reserves Bureau (SRB), landlocked US metal, and minimum working inventories [1].
Ghali notes that commodity demand has continued to firm in the aftermath of the Iran war, further supporting the hoarding trend [1]. Looking ahead, he expects Commodity Trading Advisors (CTAs) to avoid selling copper in any reasonable scenario for prices over the coming week [1]. Moreover, Ghali sees potential for significant buying flows, estimating that a continued recovery in copper prices could catalyze buying programs totaling up to +13% of max size [1].
The analysis suggests that copper markets are inching towards a potential crunch, with tight inventories and persistent hoarding behavior driving the risk of supply shortages [1].
CONCLUSION
Copper prices have rebounded strongly following the Iran war, supported by firm demand and unprecedented scarcity in inventories. TD Securities anticipates that CTAs will avoid selling and may initiate substantial buying programs if prices continue to recover. The market is facing a high risk of a copper crunch, with supply constraints and hoarding behavior likely to drive further volatility.