Why copper’s drop from all-time highs may not mark the end of its run up in prices

Copper prices have dropped from a record high last month following efforts by China to stem the rally in commodities. But supply constraints and growing demand suggest that the industrial metal’s run-up isn’t over yet.

Prices have responded to a rapid economic recovery, especially in China, says Matthew Fine, manager of the Third Avenue Value Strategy portfolios. It also has found support from the prospects for unprecedented global government spending, “with a heavy focus on clean energy and clean transportation—all of which are widely copper-intensive,” he says.

If the clean energy goals that have been announced come to fruition, “it seems very likely that we will experience one of the strongest copper demand growth periods on record,” he says. “Without copper, people can’t improve their quality of life,” and if you want to “advance humanity, consuming copper is not a choice.”