Molten copper in a metal factory, Hamburg, Germany Source: Bloomberg
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Speculators are investing in the red metal amid bets on a shortage in its supply
The market is witnessing a lot of bullish expectations that coincide with the company’s endeavors.BHP GroupTo acquire its competitor, Anglo American, as the copper mines owned by the latter are considered a major motivation behind the deal.
Many developments also emerged during the current year, which in turn supported expectations of a rise in the price of copper, and attracted investments from a wide range of speculators. Including: lack of suppliesCopperWhich prompted foundries to discuss production cuts and the forced covering of short positions on the New York Futures Exchange this month, which led to many rushing to secure supplies of the red metal.
“These developments have pushed prices to a record high, and it is difficult to predict how much copper will rise in the current situation,” Craig Lang, senior analyst at CRU Group, said by phone from Singapore. “Primary tendencies tend to be exaggerated.”
Warnings of copper supply shortages
Investors, traders and mining executives have warned for years that the world is facing a severe copper shortage, amid swelling demand in green industries, including electric vehicle sand renewable energy infrastructure. Veteran commodities expert, Jeff Curry, pointed out last week that long-term copper contracts were the best investment bet among commodities ever.
The price of copper on the London Stock Exchange rose 3% to $10,992.50 per ton at 12:04 noon Shanghai time today, Monday.
Prices have risen by more than a quarter since the beginning of the year, while basic industrial metals led gains at the sector level. And rose gold priceAlso to a record level with copper, supported by optimism surrounding the US Federal Reserve’s imminent start of reducing interest rates this year.
But on the other hand, several participants in the physical market warned that the rise in copper prices is exaggerated. Demand is still relatively weak, especially in China. It is the largest importing country, and stock levels there are still high.
Directing copper supplies to America
A series of setbacks at major mines are raising fears of an earlier-than-expected production shortfall, as foundry processing costs – an indicator of tight supplies in the crude market – deteriorated to almost zero in April.
The crisis of forced covering of short positions on the Comex futures exchange in New York led to the imposition of an unprecedented price premium on prices on the London Metal Exchange, which led to a wave of redirection of supplies of the red metal to…United State, which in turn portends a shortage of supplies available to other countries.
“The COMEX short-covering crisis is leading to a redirection of copper supplies to the US, with supply shortages in other countries,” Gong Ming, an analyst at Jinrui Furtures, said in a phone call. Ming expected that “China will soon withdraw its stocks in light of the rise in exports.”
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