BCA’s Ibrahim sees copper prices supported over the coming weeks

Investing.com -- Copper prices are likely to remain supported in the near term despite a growing disconnect from underlying demand fundamentals, according to analysts at BCA Research, which upgraded the metal to neutral from underweight in its commodity allocation framework.

BCA Research's Chief Commodity Strategist Roukaya Ibrahim said copper has diverged from its traditional macroeconomic drivers, with “speculative forces rather than current fundamentals driving the rally.”

The firm noted that weakening Chinese credit growth and fiscal spending trends would normally point to softer copper prices.

However, investor enthusiasm tied to artificial intelligence infrastructure, renewable energy investment and long-term supply constraints has helped push prices higher.

According to BCA Research, flows into industrial metal-backed exchange-traded funds surged to an 18-year high in April, highlighting strong investor demand. The firm added that bullish sentiment toward copper is now at the 95th percentile of historical readings.

Despite those elevated sentiment levels, BCA Research believes the balance of risks remains tilted to the upside in the short term.

“Over the coming weeks, renewed concerns that the US will impose tariffs on refined copper imports will likely support prices,” Ibrahim said.

The firm pointed to widening COMEX premiums, rising U.S. copper imports and inventory shifts from overseas markets into the United States as evidence that traders are positioning for potential tariff action.

Looking further ahead, BCA Research warned that the outlook becomes more balanced. Uncertainty surrounding U.S. tariff policy and the ongoing Hormuz crisis creates “meaningful two-way risks” for copper prices in the second half of the year.

Eventually, the metal will need to reconnect with underlying demand trends, BCA Research said. That adjustment could come through stronger Chinese infrastructure spending, but “otherwise, copper prices are at risk of a relapse over a cyclical timeframe.”

You May Also Be Interested In

• Hamilton Insurance Group (HG) PT Raised to $37 at Morgan Stanley
• BMO starts chip stocks coverage: Here are its preferred picks
• Boeing workers reject contract, authorize strike