[News] Copper experiences its biggest rebound in more than a decade: analysts compare current streak with supercycle of the 2000s

[S e u o n g]

The red metal hit its highest value since February 2013 on Thursday, after trading at US $ 3.58 a pound.

 

 

Copper extended its rally to US $ 8,000 a ton on Thursday amid growing optimism about demand prospects driven by the possibility that US lawmakers will pass a stimulus package. The copper market is facing the biggest rebound in more than a decade after China's unbridled appetite for raw materials and supply disruptions in the early stages of the pandemic pushed prices up more than 80% from lows observed in March.

 

Observers increasingly compare this year's rally to the price spike recorded in the early 2000s, when a surge in Chinese orders ushered in the commodity supercycle. What's more, amid rising global spending on copper-intensive green energy infrastructure, some investors estimate that the metal could break a record of more than $ 10,100 per tonne reached during the last boom. "We would expect copper to hit a new all-time high during this price cycle. We're not surprised how tight the market is," said Evy Hambro, global director of thematic investment at BlackRock Inc. The metal has exploded thanks to a number of factors, including a weaker dollar, optimism about vaccines and governments implementing unprecedented stimulus programs. US lawmakers are rushing to complete a package in time to attach to crucial public spending legislation and pass it by the end of the week. Senate Majority Leader Mitch McConnell said Congressional leaders are still in talks about new aid and he thinks "we're going to get it." That adds to recent hopes for a broad boost to demand globally as coronavirus vaccines are rolled out and major economies rebound from the pandemic. The United States will perform strongly in the second half of 2021 and there could be "another long expansion" of the economy, according to Federal Reserve Chairman Jerome Powell.

 

"Macro news is driving prices higher at this time as policies and economic recovery provide bullish catalysts for copper," wrote Jinrui Futures Co. Some analysts say the rally appears unsustainable. Capital Economics Ltd. expects lower copper prices next year as Chinese demand cools. Still, the firm acknowledges the possibility that metals markets could rise amid a global move toward low-carbon energy sources. "Global metal demand growth could be stronger than we expect," said Capital Economics analyst Samuel Burman. "The risks to our forecasts are biased upward as governments could step up their spending on green infrastructure and investors could increase their long-term net positions." Minister Prokurica celebrates From Chile, the largest copper producer in the world, the Minister of Mining, Baldo Prokurica, commented that the price increase "is, without a doubt, the best price in the last eight or nine years and, in addition to This has a virtue which is that apparently a price that has lasted four months is beginning to consolidate. Along these lines, he added that "in some way it responds to the effects that the very important growth of the Chinese economy has had, the recovery of the Chinese economy, but, in addition to that, the implementation of the vaccines that are working and that they give a certain index of normality. " "If we add to that the fact that there are copper producing countries that were paralyzed and that they are going to reduce their productions, they make the price go up, which is very good for Chile's finances and also so that we have a higher production in new investments in mining projects in our country. "