Summary: International copper prices hit another new high for more than two years this week. As of 15:00 Beijing time on October 22, LME copper futures had touched a weekly high of $7,034 per tonne, up more than 3% on the week, the first time above $7,000 per tonne since mid-June 2018. COMEX copper futures had reached a high of $3.218 per pound this week, also a new high since mid-June 2018.
International copper prices hit another new high for more than two years this week. As of 15:00 Beijing time on October 22, LME copper futures had touched a weekly high of $7,034 per tonne, up more than 3% on the week, the first time above $7,000 per tonne since mid-June 2018. COMEX copper futures had reached a high of $3.218 per pound this week, also a new high since mid-June 2018.
Because copper is widely used in power, construction, machinery and other sectors, it is regarded by the market as a barometer of the macroeconomic outlook and is known as "Doctor Copper". Industry insiders say that in the short term, expectations of U.S. stimulus policies, the movement of the U.S. dollar, and the operating status of copper mines in Chile could all have an impact on copper prices. In the medium to long term, China's industrial economy is recovering strongly, and robust copper consumption is expected to continue to support copper prices.
Meanwhile, Chile and Peru, major copper-producing regions, are still severely affected by the pandemic, with frequent worker strikes, and market expectations of supply uncertainty from copper mines have risen.
Chile's Candelaria copper mine announced that it would suspend operations from Tuesday (October 20). Workers at Chile's state-owned copper company Codelco took to the streets on Monday to protest the company's layoff plans during the pandemic.
"There is a potential risk of copper supply disruptions in Chile, which supports higher copper prices," said Anna Stablum, commodity broker at Marex Spectron. "In addition, as the pandemic continues to worsen in the United States and Europe, governments may introduce more stimulus measures, which should help boost commodity prices." The rapid recovery of China's economy and industrial activity, along with strong domestic metals demand, are key factors behind the continued rise in copper prices recently.
"In an overall accommodative monetary environment, with the dollar on a downward trajectory and strong Chinese demand, LME copper could continue to test the 2018 high of $7,348 per tonne," Li Dan said.
The International Copper Study Group (ICSG) said on October 19 that, due to the pandemic, global copper demand excluding China is expected to fall by 9% this year, but this decline will be offset by a substantial increase in China's apparent consumption of refined copper, with a sharp rise in China's net imports of refined copper. It expects a global copper market supply deficit of 52,000 tonnes this year.