Copper prices soar on Chinese demand for metals

London Metal Exchange benchmark reaches $9,965 a tonne - the highest level since March 2011 - boosted by a labour strike in Chile, the world's biggest producer

Copper prices soar on Chinese demand for metals
Bundles of refined copper are stacked at a BHP Billiton mine in South Australia. File photo by Reuters.

(ATF) Copper prices have soared to decade-long highs as China demand for the vital metal increased amid tight supplies.

The benchmark London Metal Exchange price reached $9,965 a tonne on Tuesday - the highest level since March 2011 - boosted by a labour strike in Chile, the world's biggest copper producer.

The price has more than doubled since dropping to $4,371 a tonne in March last year as the coronavirus pandemic took hold around the world.

"Copper is a standout," Eleanor Creagh, Australian market strategist at Saxo Bank said.

"The metal is continuing to climb higher as structural deficits and concerns about top exporter Chile collide with a vaccine-led recovery and increased demand for copper in green spending, smart electricity grid building, electric vehicles and their charging stations and wind turbines."

NEARING RECORD

Creagh said "it’s only a matter of time" before copper hits $10,000 per tonne. The metal is not far off its all-time record of $10,190 a tonne, achieved in February 2011.

With major copper consumer, China, is enjoying a strong economic recovery, and the country's demand for the metal has also soared while concerns have risen over supplies.

"Copper was fuelled higher as Chilean port workers protested against the government's Covid-19 relief policies and mining unions said they supported the strike," Anna Stablum, analyst at Marex Spectron, said. 

Metal prices have risen across the board in recent days. The relative strength in London copper versus Shanghai, however, has led to an open export arbitrage.

"That might potentially deter some speculative buying in London in the very short term," Warren Patterson, head of commodities strategy at ING, said.

With reporting by Agence France-Presse

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copper metal commodities China London Metal Exchange