Bloomberg
Copper rises above $ 9,000 as the main deficit drives the record rally
(Bloomberg) – Copper surged above $ 9,000 a ton for the first time in more than nine years. Bet that increased demand will spark a historic deficit due to the recovery from the pandemic, putting the economy on a record run of monthly prices rose more than 3% on Monday and are facing an unprecedented eleventh monthly spike in February. Base metals are tearing up expectations that post-crisis consumption will exceed short-term supply, with commodities like copper and nickel receiving an extra boost from their role in the clean energy transition. The rapid pace of advance is causing market watchers to debate whether a new commodity super cycle is now in sight. The metal’s revival marks a turnaround from earlier the month when copper experienced turbulence as investors signaled the need for more detail on stimulus measures and so on, concerns about slowing Chinese demand. However, during the Chinese New Year, prices rose as factory production was livelier than usual. Expectations of a revival in inflation helped too. “Market sentiment is currently hot in anticipation of a new cycle of global inflation,” said Jia Zheng, an analyst at Goldtrust Futures Co., based in Shanghai. “Chinese investors returning from the New Year holidays are waiting for further stimulus from the US and Europe. Basically, Chinese demand has exceeded expectations as travel restrictions spurred consumption. “Goldman’s ViewGoldman Sachs Group Inc. reiterated its bullish stance last week, saying that China’s return from the weeklong hiatus had sparked another surge in prices. The market faces its largest deficit in a decade this year, with a high risk of shortages in the months ahead, the bank said. There are already signs of tightness emerging on the London Metal Exchange as spot contracts trade at a premium of futures. This pattern, known as backwardation, was a feature of the market during a record boom in Chinese demand last year, and suggests that spot demand will again outstrip supply as stock market stocks run out. In addition, there are concerns about a supply bottleneck and production cuts in a top Chinese smelter. Inventories tracked by the Shanghai Futures Exchange are the lowest for this time of year in more than a decade. Three-month copper traded at $ 9,110 per ton on the LME at 9:58 am in Singapore, after hitting $ 9,187, its highest level since 2011. In China, the Shanghai Futures Exchange contract hit the daily limit. Other metals rose, with LME tin hitting its highest level since 2011 and nickel rising towards $ 20,000 per ton. The Copper rally was a boon to the suppliers. Jiangxi Copper Co., China’s leading producer, rose by up to 13% in Hong Kong to its highest level since 2013. In Australia, OZ Minerals Ltd. more than doubled in the last 12 months and has stakes in BHP Group and Rio Tinto The group rose on Monday. You can find more articles like this at bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP
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