Copper Hits Record Above $11,000 on Bets That Shortage Looms

Copper Hits Record Above ,000 on Bets That Shortage Looms

(Bloomberg) — Copper rose to its highest level ever, extending a powerful months-long rally led by financial investors who rushed into the market in anticipation of worsening supply shortages.

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Futures on the London Metal Exchange jumped more than 4% in early trading Monday, taking copper above $11,000 a tonne for the first time. The market has seen many optimistic forecasts and BHP Group Ltd. wants to buy its rival Anglo American Plc, mainly for its copper mines.

Several developments in 2024 have emboldened copper bulls and attracted a growing flow of hot money. Tight supplies of copper ore have fueled talk of a cut in smelter output, while a short squeeze on the New York futures market this month sparked a global rush to secure the metal.

“It took prices to another level and it’s very difficult to talk about a top in this environment,” Craig Lang, senior analyst at CRU Research Group, said by phone from Singapore. “Commodity markets tend to exceed their limits. »

Read more: Squeeze in New York copper sales rocks metals markets

Investors, traders and mining executives have been warning for years that the world faces a critical shortage of copper amid growing demand in green industries – from electric vehicles to renewable energy infrastructure. Jeff Currie, a commodities veteran and director of strategy on the energy pipeline team at Carlyle Group Inc., said last week that copper was the best long trade he had ever seen.

LME copper was up 3% at $10,992.50 a tonne as of 12:04 p.m. Shanghai time on Monday.

Prices have risen by more than a quarter since the start of this year, leading to broad-based gains for major industrial metals. Gold also hit a record high along with copper, with both metals supported by optimism that the U.S. Federal Reserve will begin cutting interest rates this year.

Read more: The copper market grapples with a crucial question

Many in physical trading have warned that copper prices are ahead of reality. Demand remains relatively tepid, particularly in China, the main buyer, where inventory levels remain high.

Repurposed metal

A series of setbacks at major mines is fueling fears of a long-awaited production shortfall sooner than expected. Smelter processing fees – an indicator of stress in the ore market – plunged below zero in April.

And the tightening of the Comex exchange in New York has pushed prices to an unprecedented premium over the LME. That sparked a rush to reroute metal supplies back to the United States, meaning less metal available elsewhere.

“The Comex short squeeze is redirecting copper to the United States and reducing supply in other regions,” Gong Ming, an analyst at Jinrui Futures Co., said by telephone. “The Chinese market is expected to see its stocks soon withdraw with an increase in exports. »

–With help from Liezel Hill and Jason Scott.

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