Copper's Momentum: Distinguishing Real Demand from Market Euphoria

The recent copper rally has triggered a familiar debate in commodity trading circles. Is the rally truly grounded in structural demand, or are we witnessing another round of speculative excess?

Structural demand tells one story. Global infrastructure buildout, renewable energy transitions, and EV adoption pipelines all require substantial copper. These aren't temporary tailwinds—they're multi-year supply-demand dynamics that should support prices. Manufacturing PMI trends and inventory levels seem to back this thesis.

But here's where it gets tricky. Speculative positioning has reached notable levels. Options markets are pricing in aggressive upside, retail interest is picking up, and leverage in futures has climbed. When sentiment gets this frothy, reversals can be sharp and unforgiving.

The real question traders face: Can structural fundamentals keep pace with current valuations, or will euphoria eventually clash with reality? Position sizing matters more than direction calls in environments like this.