We are not seeing the demand the market is betting on. Comparing spot scrap (current demand) prices with the futures curve, the contango is as large as you are apt to see.
The top-tick in the futures on April 4 was $4.2565, 4.2130 last.
From Bloomberg via Yahoo Finance Canada, April 4:
Copper rallied to the highest in 14 months as investors flock to the bellwether industrial metal in response to rising supply risks and hopes for a global recovery in demand.
Prices climbed as much 1.5% on Thursday after dovish comments from Federal Reserve Chair Jerome Powell added impetus to a rally that began in early February on fast-mounting risks to supply.
Disruptions at major mines have left smelters paying historically steep prices to get hold of mined ore, and Chinese plants — which produce more than half of the world’s refined copper — are moving closer to implementing a joint output cut in response.
At the same time, tentative signs of a return to growth in the global manufacturing sector are raising hopes that tightening market conditions could help power copper to new records.
To be sure, worries about demand in China’s property sector and other key industries still loom large, and a seasonal slowdown in activity is lasting longer than bullish investors would hope. But beyond China, there are growing hopes that India’s massive infrastructural spending splurge and the global AI frenzy will open up sizable new areas of demand growth.
On the supply side, there are ongoing doubts about whether Chinese smelters will make meaningful cuts to output, but production risks are continuing to stack up at mines around the world. On Wednesday, Ivanhoe Mines reported a 6.5% quarterly drop in output at the giant Kamoa-Kakula mining complex in the Democratic Republic of Congo, while drought conditions in neighbouring Zambia are also putting the country’s major planned expansion of mined output at risk....
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