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 last 25 years, with prices rising to a record high of $11,104 per metric ton last year from $2,000 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.
Copper mines suffer so many accidents every year that analysts pencil in a “disruption allowance” in their annual supply forecasts. But even by its standards, the red metal has seen far more disruption than the market could have anticipated. Hence why the metal is currently changing hands at prices above $10,000.