Copper Surges Above $9,000 as Shortfall Concern Spurs Rally
(Bloomberg) -- Copper rose above $9,000 a metric ton for the first time in nine years, taking another step closer to an all-time high set in 2011 as investors bet that supply tightness will increase as the world recovers from the pandemic.
Copper is surging amid a broad rally in commodities from iron ore to nickel, while oil has gained more than 20% this year. The bellwether industrial metal has doubled since a nadir in March, boosted by rapidly tightening physical markets, prospects for rebounding economic growth and the expectation that a years-long era of low inflation in key economies may be ending.
Investors are also piling into copper on a bet that demand will surge in the coming years as governments unleash unprecedented stimulus programs targeting renewable energy and electric-vehicle infrastructure, which will require huge volumes of the metal.
“The list of bullish factors for copper is extremely long,” Max Layton, head of EMEA commodities research at Citigroup Inc., said by phone from London. “A lot of the most bullish developments are really going to play out in the next few months, and therefore we think it’s going to be sooner rather than later that it gets to $10,000.”
In some areas of the physical copper market, supply conditions are the tightest in years and may come under even more pressure as smelters in top consumer China face shrinking profit margins for processing raw ore into refined metal. Copper treatment charges, an indicator of refining margins, are at $45.50 a ton, the lowest since 2012. One leading supplier is considering cutting output, in a potential blow to buyers.
Surging prices are a boost for miners, driving up stock prices and raising the prospect of more blockbuster returns to shareholders. Jiangxi Copper Co., China’s top producer, gained as much as 20% in Hong Kong to the highest level since 2012, while U.S. producer Freeport-McMoRan Inc. closed at the highest since 2014 on Friday.
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