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Why Copper Is Finding Momentum Again

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Why Copper Is Finding Momentum Again

Copper prices rose on Monday on concerns about disruptions to supply in Chile alongside Chinese demand showing signs of picking up, according to Bloomberg.

What Happened: Workers union at BHP Group’s (NYSE: BHP) operations center in Santiago rejected the company’s final wage offer raising the chances of a strike at the mines, according to the report.

Copper prices had surged to a record a week ago as Covid-19 upended supply chains, while stimulus measures supported economies and sparked a surge in demand. The metal hit $10,747.50 on May 10, an all-time high.

The rally stumbled last week along with other industrial materials after China stepped up efforts to cool a rally in commodities that is fanning fears over a global surge in inflation, according to the report.

Copper reached as much as $10,350 Monday morning in London and $10,306.50 in Shanghai.

Industrial output data from China on Monday showed aluminum and steel production hit new records in April amid robust demand and supply chain concerns.

Why It Matters: A recent Goldman Sachs report, as cited by CNBC,  has estimated the ongoing supply crunch that the market is facing for copper — a key part of sustainable technologies, including electric vehicle batteries and clean energy — could help boost its price by more than 60% in four years.

According to the bank, increased demand and likely low supply are set to drive up the price from the current levels of around $9,000 per ton to $15,000 per ton by 2025.

Stocks with exposure to copper include Southern Copper Corporation (NYSE: SCCO), Freeport-McMoRan Inc. (NYSE: FCX), and BHP Group (NYSE: BHP).

Read Next: U.S. Gold Corp. Amplifies Potential of Copper with Copper King Gold Project

Photo by Tony Hisgett on Flickr

 

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