Copper Prices Approach Two-Year Highs on Tight Supplies and Strong Demand in China

Copper prices soar towards two-year highs as supply concerns and Chinese demand drive market frenzy

In the bustling world of commodities trading, copper prices are making headlines once again as they edge closer to two-year highs. The London Metal Exchange (LME) reported that benchmark copper was up 0.8% at $9,986 a metric ton, with prices touching $10,118 and hitting a peak of $10,208 just last week.

The surge in copper prices can be attributed to a combination of factors, including tight supplies and optimistic expectations for increased demand in China, the world’s largest consumer of the metal. Traders are buzzing with excitement as Chinese authorities unveil plans for further measures to bolster their economy, with a focus on supporting key industries like copper.

Analysts are predicting supply deficits in the coming year, fueled by growing demand from sectors such as electric vehicles and new technologies like artificial intelligence and automation. The potential merger between mining giants BHP and Anglo American is also making waves, as it would create a powerhouse controlling 10% of global copper supplies, surpassing industry giants like Chile’s Codelco and Freeport-McMoRan.

China’s recent announcement of supportive monetary and fiscal policies has further fueled optimism in the market, with reports of relaxed home purchase restrictions in some districts boosting appetite for industrial materials like copper. Additionally, falling copper stocks in LME-registered warehouses have added to the bullish sentiment, dropping 35% since the beginning of the year.

Despite some improvements in the supply picture, experts warn that the market remains fragile, with potential disruptions looming from strikes or natural disasters. The limited availability of scrap copper, despite rising prices, is also contributing to the tight supply situation.

In the wider metals market, aluminium, zinc, lead, tin, and nickel are all experiencing fluctuations, reflecting the dynamic nature of the commodities sector. As traders keep a close eye on developments in China and global supply chains, the copper market continues to be a hotbed of activity, with prices poised for further gains in the near future.