Copper prices hover near more than nine years highs

Copper price jumped to its highest in more than nine years on Friday and logged its third straight weekly gain as tight supplies and bullish sentiment towards base metals continued after the Chinese New Year.

Benchmark copper on the London Metal Exchange (LME) added 4.4% to US$8,930/ton by 1723 GMT. The metal used in power and construction touched a peak of US$8,995, its highest since September 2011.

“The return of the Chinese market post the Lunar New Year has seen some renewed interest in base metals,” said Gianclaudio Torlizzi, a partner at consultancy T-Commodity in Milan.

“The very short term for copper is bullish, but we are in the latest phase of a rally and we would look to short the area closer to US$9,000.”

Sucden Financial Head of Research, Geordie Wilkes said copper was also supported by sustained signs of recovery in the United States and Europe thanks to coronavirus vaccines.

“While we expect the market to correct to the downside, these dips will likely be well bought,” he said.

Inventories of copper in warehouses registered with the LME are near 2005 lows at 75,700 tons. Cancelled warrants – metal earmarked for delivery – account for about 39% and further fuelled concerns about tight supply on the LME market.

The premium for cash copper over the three-month contract doubled to US$40 a ton, its highest since September.

Speculative interest in copper was elevated, adding to interest in the metal.

The net speculative long on LME copper is seen at 45% of open interest at Wednesday’s close, near the year-to-date peak of 46% last month, brokerage Marex Spectron said.

Stocks of copper, zinc and aluminum jumped in warehouses monitored by the Shanghai Futures Exchange after the Chinese New Year.

The Yangshan copper premium paid on top of LME prices for physical delivery climbed to US$72 a ton, indicating higher Chinese demand for metal imports.

A weaker US dollar also helped to boost the appeal of metals priced in the currency.

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