BusinessCopper Hits 10-Year High, Over $10,000 Per Tonne

Copper Hits 10-Year High, Over $10,000 Per Tonne

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BEVERLY HILLS, April 29, (THEWILL) – The price of a tonne of copper has traded above $10,000 for the first time in a decade as the rebound from the coronavirus pandemic unleashes a surge of demand from China and the developed world that could not be matched by supply.

Its price has risen by more than a quarter since the start of the year as the global economy begins to shake off the COVID-19 pandemic.

After a wobble in March due to concerns about fresh lockdowns in Europe and a strengthening US dollar, copper has resumed the powerful rally that started a year ago when it sank to $4,300 a tonne.

The price has climbed 11 per cent since the start of the month and is now closing in on the record high of $10,190 set during a commodity boom in 2011. It reached $10,008 on Thursday.

“With reflation signals on fire, copper could test all-time highs,” said Bart Melek, head of commodity strategy at TD Securities.

Copper is used in everything from household appliances to electric vehicles and wind turbines. As the most cost-effective conductive metal, it is expected to play a crucial role in the shift away from hydrocarbons to more sustainable sources of energy, including solar and wind.

This has fuelled talk of a copper supercycle, or a prolonged period of strong demand that pushes prices to record new highs. In a recent report, Goldman Sachs declared copper as the “new oil” and said green demand will match, then quickly surpass, the incremental demand China generated in the 2000s.

However, the recent run in the price of copper reflects a coronavirus-induced supply-demand imbalance that could result in a 500,000-tonne reduction in refined metal stockpiles this year, according to Max Layton, analyst at Citi.

“The ‘super’ part of the copper supercycle is in full swing right now reflecting a strong cyclical rebound in China and unusually swift and metals intensive rebound in the US and Europe”, said Layton.

The industrial metal is considered a barometer for the general health of the economy by market analysts, which have dubbed it Dr. Copper.

Daniel Briesemann, analyst with Commerzbank, said that higher prices still could follow as copper would play a major role in countries’ long-term decarbonisation strategies.

For Anna Stablum, analyst with Marex Spectron, the dollar-denominated metal is primarily being “supported by the weakness of the dollar”.

The greenback slid 2.5 percent against a basket of currencies in April, as buyers with other rising currencies against the greenback go on a spree.

Neil Wilson of Markets.com saw the rising price as being the result of a rise in demand, notably from China which swallows more than half of world production, and also supply problems from top global supplier Chile.

Chinese declared demand is estimated to have risen 13 percent last year alone, according to the intergovernmental International Copper Study Group (ICSG).

That trend is likely to continue with Beijing having earlier this month announced a record 18.3 percent jump in first quarter economic growth.

Chilean supply meanwhile continues to be hampered by days of protests by workers at major ports and the country’s copper mines over pension policy.

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