Copper prices exceed 8,000 USD per tonne on the international market
This rise in the price of the red metal is a boon especially for the DRC’s miners who have already produced more than 1.322 million tonnes of copper during the first 10 months of 2020.
Copper topped $ 8,000 a tonne for the first time in more than seven years, with Goldman Sachs Group and BlackRock signaling the start of a new long-term bull market as supply lags behind expected growth of demand, reports Mining News Pro.
The market has seen the sharpest rally in more than a decade, with China’s appetite for commodities and supply at the start of the Covid-19 pandemic, lifting copper by around 80% by compared to its March low.
Deficit expectations, the weak dollar and its role in green technologies also fueled the gains. Some banks and investors are now drawing comparisons to the peak in the early 2000s, when a surge in Chinese orders ushered in the latest commodities super-cycle.
“You have all the telltale signs of a super-cycle,” Jeff Currie, head of commodities research at Goldman Sachs, told Bloomberg TV. He cited metals hitting multi-year highs, the dollar weaker, crude oil hitting $ 50 and global liquidity rising.
The surge in prices has been a boon to miners, with stakes in copper-focused producers including Antofagasta and Freeport-McMoRan reaching multi-year highs recently. In addition, production costs fell, paving the way for an explosive year for profitability.
Copper rose 1.4% to $ 8,028 a tonne, the highest price since 2013, and was $ 7,987 at 10:25 am on the London Metal Exchange. Most other metals also advanced, with aluminum advancing 0.5%. Singapore iron ore futures topped $ 160 per tonne, reaching the highest level since trading began in 2013.
Goldman pointed out, the same source said, the start of a positive feedback loop between commodities, the dollar and emerging market growth that has driven past structural bull markets. At the center is strong, synchronized and policy-driven demand focused on the redistribution of wealth and renewables and, with spending on the supply of commodities outside of renewables still at very low levels , this growth in demand is expected to keep markets tight for the foreseeable future, he said in a December 17 memo.
BlackRock expects copper to hit new all-time highs in the recovery of the cycle, Evy Hambro, the company’s global head of thematic investments, told Bloomberg TV on Thursday.
China’s relative success in containing the pandemic and optimism about global economic growth next year, as vaccines roll out, are fueling gains in industrial products, from iron ore to petroleum. This was a remarkable turnaround for copper, which fell more than 50% from a 2011 record, trading below $ 5,000 per tonne in a slump in 2015-16 and again earlier. this year.
Copper also benefits from more specific factors that make it attractive to long-term investors. While many expect oil prices to rebound in the near term as the world begins to return to normal, there is more doubt about its long-term outlook as the energy transition accelerates. Copper, on the other hand, is likely to benefit from the change due to its use in electrical wiring.
In the short term, copper is driven by tight supplies and high demand. China, the top consumer, recorded a record volume last month, indicating resilient consumption as the country emerges from the pandemic. Among the signs of tightening, stocks tracked by major exchanges, including the LME, fell to a six-year low.
