Copper rose above $10 000 a ton amid mine-supply growth concerns and as the return of Chinese investors from a three-day break put the spotlight on the strength of demand in the world’s top consumer.
The metal climbed to the highest in a decade this week, fueling bets it will rally further to take out the record of $10 190 set in February 2011, as the reopening of major industrial economies sparks a surge across commodities markets from iron ore to lumber.
Echoing a growing list of lofty price targets, Trafigura Group said in March it expects copper to top $15 000 in the coming decade on the push toward decarbonization, and Australia & New Zealand Banking Group Ltd. raised its price target to $10 750 citing subdued supply growth.
Supply-side issues are adding to market tightness as increasing optimism over a global economic recovery, government stimulus and rising investment in new energy sectors drive demand growth, ANZ analysts led by Daniel Hynes wrote in a report on Thursday.
Zambia said a lack of capital has halted production at Konkola Deep, a copper mine it seized from Indian billionaire Anil Agarwal’s Vedanta Resources Ltd. Still, Peru might potentially offer some relief to tight global supplies after it reported a 19% jump in March copper output.
The rally is, however, boosting concerns about short-term Chinese demand. Some manufacturers and end-users have been slowing production or pushing back delivery times after costs surged, while weaker-than-expected domestic consumption has opened the arbitrage window for exports.
“Copper prices will remain strong as a continued rebound in global PMIs bolstered investors’ bullish sentiment,” Citic Futures Co. said in a note. While Chinese demand doesn’t support overheated prices, the broker recommended investors holding onto their positions for the time being.
Copper rose as much as 0.8% to $10 028.50 a ton on the London Metal Exchange before trading at $10 006.50 as of 7:48 a.m. in London. In other markets, nickel fell 0.2% and aluminum rose 1.2%.