Copper raced to its highest levels since January this week as speculators piled into the market, betting on further disruptions in top producer Chile and firm demand from the biggest consumer China.
Copper on the London Metal Exchange has surged more than 40% since touching a 45-month low in March, driven recently by fears that the COVID-19 pandemic will curb mine production in Chile.
Speculative money, especially from computer-driven funds, has recently been tracking bullish technical signals in copper, traders and analysts said.
“Momentum is really quite astonishing right now. Copper is within striking distance of hitting the January high and that is probably acting as a magnet to the market,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
LME benchmark copper had gained 0.8% to US$ 6,237 a ton by 1600 GMT, the highest since Jan. 21.
The 2020 high for copper was US$ 6,343 on Jan. 16, which in turn was the strongest since May last year. Chile’s mining minister said his country was prioritizing workers’ health.
“We really need to see significant disruptions from South America in order to justify a move in copper back towards that January high... At that point, I think it will run out of juice because it’s overbought, needs a correction and needs to stabilise,” Hansen said.
The most-traded August copper contract on the Shanghai Futures Exchange hit its highest in more than 14 months, helped by a bull run in equities in top metals consumer China.