ASX copper stocks have been among the best performers in the market in 2024.
And while most copper miners are sliding today, alongside the broader market, the future continues to look bright as the red metal surged another 2.0% overnight to US$10,424 per tonne.
That's right near all-time highs. And it sees the red metal up 28% from this time last year, when that same tonne was trading for US$8,122.
As for that strong performance, shares in S&P/ASX 200 Index (ASX: XJO) copper stock Sandfire Resources Ltd (ASX: SFR) are up 57% over the past six months.
And the Aeris Resources Ltd (ASX: AIS) share price has surged 100% over the half year, compared to a 12% gain posted by the All Ordinaries Index (ASX: XAO).
Then there's dual-listed, Canadian-based Capstone Copper Corp (ASX: CSC).
Capstone Copper only began trading on the ASX on 8 April. Since then shares have leapt 20%, compared to a 1% gain posted by the All Ords over this same period.
What's boosting copper prices?
ASX copper stocks have obviously been benefiting from fast-rising copper prices.
The red metal has been supported by strong global demand growth, even though supplies have been disrupted at several major mines worldwide.
Expected interest rate cuts from major central banks, including the US Federal Reserve, could further fuel medium-term demand.
Longer-term tailwinds for ASX copper stocks are likely to come from the globe's ongoing transition to electrification. The highly conductive red metal is a critical component in EVs, the new generation of AI-enabled data centres, and much more.
And despite the copper price already having surged 28% over 12 months, Goldman Sachs believes the metal is due to gain another 15%. The broker forecasts an end-of-year price of US$12,000 per tonne.
So, what's all this about a big short squeeze?
I'm glad you asked!
ASX copper stocks and the big short squeeze
If you follow futures markets, you may have noticed the unprecedented short squeeze that has sent copper prices surging on the Comex over the past few days.
If you're unfamiliar with Comex, it stands for the Commodity Exchange Inc.
The United States-based Comex is the primary futures and options market for trading base and precious metals. Ordinarily, the spread on copper futures on Commex and the price for copper on the London Metal Exchange (LME) vary by only a few dollars.
But as Bloomberg reports, the premium for New York copper futures has rocketed to US$1,200 per tonne, which has never been seen before.
This bodes well for the demand outlook for ASX copper stocks.
The short squeeze reportedly comes in part as traders pile in amid forecasts that copper supply growth will likely lag demand growth for years to come.
According to Matthew Heap, a portfolio manager at Orion Resource Partners:
The broader story is that there are new investment funds that are boosting their exposure to copper for a multitude of reasons, and while that's a global trend, a huge amount of that investment has been heading to Comex.
While ASX copper stocks may not be tapped to fill the immediate supply needs, the dynamics at play here tell me they're well-positioned for the year and potentially years ahead.
Commenting on the unprecedented Comex spread, Jia Zheng, head of trading at Shanghai Dongwu Jiuying Investment Management, said (quoted by Bloomberg), "The short squeeze is set to continue as traders might not be able to ship enough metal from either Chinese bonded warehouses or from Europe ahead of the delivery date."
This certainly goes a long way toward explaining why BHP Group Ltd (ASX: BHP) is so keen to acquire copper-focused Anglo American (LSE: AAL). If successful, this would see BHP become the largest ASX copper stock and, indeed, the biggest copper producer in the world.
