Copper is currently trading close to a remarkable US$10,000/t, reaching a two-year peak. This surge is driven by investor speculation that mining companies will find it challenging to meet the growing copper demand.
In recent weeks, base metals have seen widespread increases, with copper starting 19/04/2024 with a new rise to US$9,979.24/t. The metals market has been uplifted by signs of enhanced manufacturing activity from the US to China. However, geopolitical threats and renewed doubts about monetary policy pose significant risks.
The initial boost to copper’s surge came from a series of disruptions at key mines, leaving smelters in a scramble for alternative supplies. While China’s demand has been in a seasonal slump, there is increasing optimism that a potential recovery in global manufacturing activity will sustain demand.
Citigroup Inc. analysts stated in an email note that the future course will be dependent on data and guided by the fundamentals of individual metals. They predict a bullish outlook for copper over the next three months due to the possibility of a tighter market and short covering, while other metals have less robust physical fundamentals.
This rally has occurred despite investors grappling with a perceived change in the Federal Reserve’s approach to interest rate cuts. Last week, Chair Jerome Powell indicated that it would take the bank “longer than anticipated” to ensure inflation is in check.
In the aluminium sector, the volume of stock available to other purchasers is nearing record lows as orders to remove metal from Asian depots have surged for the fifth consecutive day. Last week, Glencore and Trafigura were involved in large orders to withdraw metal from the exchange, as reported by Bloomberg News.
