This 'Mineral' Hits Record Highs... How to Invest [Weekend Money]

Copper Prices Near Record Highs

"Asset Allocation to Commodities Is Effective"

Spotlight on ETFs Investing in Physical Copper

With rising electricity consumption leading to increased demand for copper, there are growing expectations that exchange-traded funds (ETFs) that allow investment in physical copper deserve closer attention.

Sangcheol Kang, a researcher at Eugene Investment & Securities, stated, "It is effective to allocate a portion of your assets to commodities such as gold or copper," adding further details to his perspective.

According to Kang, the price of copper on the London Metal Exchange (LME) has climbed 16% since the beginning of the year, surpassing $14,000 per ton (approximately 19,521,600 won). It has remained above $10,000 per ton since October last year, breaking through the record highs reached in 2021–2022 and 2024. Even on a real basis, taking inflation into account, copper prices are close to their highest level since 2011. "If copper exceeds $15,000 per ton, it will represent the highest real price in about 50 years, since 1974," he commented.

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Kang identified the fundamental driver of rising copper demand as increased electricity consumption, since copper is involved throughout the entire process of power generation, transmission, and usage. As electricity demand accelerates, copper demand is also expected to grow for the foreseeable future. S&P Global projects that global electricity demand will rise by around 50% by 2040. In addition to a surge in investment in AI data centers, demand related to energy transition and expansion (such as replacing and upgrading transmission and distribution infrastructure), as well as increased demand for defense, are separately fueling copper demand. In fact, global copper demand is projected to rise from 28 million tons last year to 42 million tons by 2040. Conversely, unless meaningful supply expansions beyond the currently planned investments are made, there could be a supply shortfall of about 10 million tons in 2040.

Kang reiterated that it is effective to allocate a portion of your assets to commodities such as gold or copper. He explained, "It serves as a hedge against inflation and rising interest rate risk, while mitigating the burden on stock valuations." He recommended investing in ETFs that hold physical copper, suggesting a staggered buying approach during price corrections. In the case of the TIGER Copper Physical ETF, it invests in warehouse warrants for copper held in storage, and as it does not implement currency hedging, its performance in KRW is influenced by both the copper price and the USD/KRW exchange rate.

This content was produced with the assistance of AI translation services.