Copper hits 10-year high as bulls bet on global recovery

Copper’s stunning rally towards its highest level since 2011 is showing no signs of abating, with bulls swarming in to profit as stimulus measures, vaccine rollouts and climate pledges fuel a global recovery from the pandemic (reports Bloomberg).
30th April 2021
Resources Rising Stars

Copper’s stunning rally towards its highest level since 2011 is showing no signs of abating, with bulls swarming in to profit as stimulus measures, vaccine rollouts and climate pledges fuel a global recovery from the pandemic (reports Bloomberg).

Copper on Tuesday extended gains to the highest in about a decade as global growth underpinned a rally in metals markets ranging from aluminium to iron ore.

Commodities are advancing towards the highs of the last supercycle, when prices spiked in the early 2000s with a surge in Chinese orders.

Metals led by copper, a barometer of the global economy, are benefiting as the world’s largest economies announce stimulus programs and climate pledges as they rebuild from the coronavirus shock. Investor appetite is increasing, with aggregate open interest in SHFE copper at the highest in more than a year.

“Marco-economic data continues to point to strong demand conditions for copper,” Vivek Dhar, an analyst with Commonwealth Bank of Australia, wrote in a note, citing industrial output and manufacturing indexes across the globe.

Copper rose as much as 1.4 per cent to $US9885/tonne on the London Metal Exchange, the highest level since August 2011, before trading at $US9843 at 1pm in Shanghai.

Prices hit an all-time high of $US10,190 in February 2011. The metal surged as much as 2.2 per cent to 72,510 yuan ($US11,182) on the Shanghai Futures Exchange, also the highest level in almost a decade. Other metals were broadly higher, with aluminium in London at a three-year high.

On the supply side, some Chilean port workers began scheduled protests against the government’s pandemic relief policies, threatening disruptions to output from the South American country, which accounts for about a quarter of the world’s copper supply.

Despite all the bullishness, near-term copper demand from China may weaken. The top user may ship more of the metal overseas amid weaker-than-expected domestic demand, with the so-called arbitrage window for exports opening up for traders for the first time since September, according to Shanghai Metals Market.

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