Copper prices could reach 7,500 USD per tonne (Analysts)
This week, copper traded up to USD 6,800 per tonne in the international market. Several analysts are betting that the red metal could easily peak at $ 7,500 or even more if supply continues to tighten.
Several traders and analysts say shrinking spot reserves could trigger another price spike, building on a rally that took copper this week to two-year highs above $ 6,800 per tonne, miningnewspro reports .com.
According to Red Kite Capital Management fund manager George Daniel, the market is starting to look like it was in the early 2000s, when a similar buying spree in China emptied global copper warehouses and drove prices up. at record levels.
Caixin’s China Manufacturing Purchasing Managers Index for August hit its highest level since January 2011, with copper consumption rising as factories pump out cars, appliances, smartphones and power cables, reports the same source.
“This time it was different because China sucked everything up,” Daniel said in London. “It feels like we are entering a period where there is simply no copper. “
Current conditions could push prices up to $ 7,500 per tonne, he said. Citigroup analysts are even more bullish, advising customers this week that a price of $ 8,000 is plausible if global stocks drop near levels seen in 2011, when copper hit a record high of $ 10,190 per tonne.
On the London Metal Exchange (LMT), evidence of an impending supply tightening is mounting, stocks are at their lowest level in almost 15 years – just enough to last just over a day. A year ago, they would have lasted five.
In the past, copper stored elsewhere in the global supply chain was diverted to stock exchange storage depots. But now there are signs that the metal may not return to the stock market as freely, given the strength of Chinese demand.
Data from the LME shows that there were around 120,000 tonnes of copper in private storage in Europe at the end of June, but none materialized on the exchange, even with the lackluster economic recovery in Europe. region. At the same time, the Asian LME repositories are practically empty. There are around 80,000 tonnes in Comex depots in the United States, but manufacturing in the world’s largest economy is also starting to recover strongly.
Consumers and traders may be more reluctant to dump excess inventory over fears that a new wave of coronavirus infections could re-wreak havoc on supply chains. The desire to bolster commodity reserves was one of the factors behind the rapid rebound in orders as China emerged from the lockdown, Trafigura, the world’s largest copper trader, said in June.
