Copper ended a two-week rally Friday but still posted its biggest weekly gain in more than five years, buoying shares in copper producers including Phoenix-based Freeport McMoran.
But analysts questioned whether copper’s rally will last.
Spot copper closed Friday at $2.51 per pound on the New York Mercantile Exchange, down from a 16-month high of $2.55 on Thursday.
Copper had risen more than 10 percent since Oct. 24 and logged 14 consecutive daily gains, driven largely by some improving economic data and news of planned infrastructure spending in China, which uses about half of the world’s copper output.
That rally was extended after President-elect Donald Trump announced on Wednesday that he will push for some $1 trillion in infrastructure spending.
Copper producers rode the news to share gains, with Freeport shares logging a 23 percent increase this week to close Friday at $13.93 in trading on the New York Stock Exchange.
But many financial analysts cited speculative buying and doubted the rally will continue:
- Analysts at Citigroup said in a widely reported research note that the copper market looks overbought and the short-term rally “appears premature.”
- Goldman Sachs Group analysts said in a research note that copper’s rally could reverse abruptly in the first quarter on a pickup in supply and slowing demand and credit growth in China, Bloomberg News reported.
- German bank Commerzbank AG said copper’s rally is unsustainable and that prices are bound to fall in the short term as investors return their focus to fundamentals of iffy demand and oversupply, as reported by Reuters and Bloomberg.
- The Wall Street Journal reported Friday that Chinese regulators are enforcing new limits on copper positions in China to dampen speculative retail buying.
