Copper hits record above US$11,000 on bets that shortage looms
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Traders and mining executives have warned that the world faces a critical shortfall of copper amid ballooning demand in green industries.
PHOTO: REUTERS
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LONDON – Copper surged to its highest level, extending a powerful, months-long rally driven by financial investors who have piled into the market in anticipation of deepening supply shortages.
Futures on the London Metal Exchange (LME) jumped more than 4 per cent on May 20, taking copper past US$11,000 a tonne for the first time.
The market has seen many optimistic forecasts, and BHP Group wants to buy rival mining company Anglo American chiefly for its copper mines.
Several developments in 2024 have emboldened copper bulls and drawn in a rising flow of speculative money. Tight supply of copper ore fuelled talk of output cuts by smelters, while a short squeeze on the New York futures market in May triggered a global rush to secure the metal.
“That has taken prices to another level and it’s very difficult to call a top in this environment,” Mr Craig Lang, principal analyst at researcher CRU Group, said by phone from Singapore. “Commodities markets do tend to overshoot.”
Investors, traders and mining executives have warned for years that the world faces a critical shortfall of copper amid ballooning demand in green industries – from electric vehicles to renewables infrastructure.
Commodities veteran Jeff Currie said earlier in May that copper was the best long trade he had ever seen.
LME copper was up 3 per cent to US$10,992.50 a tonne by 12.04pm on May 20.
Prices have gained more than a quarter since the start of 2024, spearheading across-the-board gains for major industrial metals.
Gold has also rallied to a record
A series of setbacks at major mines is fuelling fears that a much-anticipated production shortfall will arrive earlier than expected. Smelter treatment fees – a gauge of tightness in the ore market – plunged to below zero in April.
In addition, a short squeeze on the Commodity Exchange (Comex) in New York drove prices there to an unprecedented premium over the LME. That triggered a rush to reroute metal supplies to the United States, meaning less metal available elsewhere.
“The Comex short squeeze is rediverting copper to the US and tightening supplies in other regions,” said Jinrui Futures analyst Gong Ming.
“The Chinese market is expected to see inventories withdrawal soon, with exports rising.”
Still, many participants in the physical trade have warned that copper prices are running ahead of reality. Demand remains relatively tepid – especially in top buyer China, where inventory levels remain high. BLOOMBERG
