Copper prices rose on Friday as traders awaited the reopening of Chinese markets, which would provide clarification on how fast demand in metals will increase following the country’s lifting of strict COVID-19 restrictions.
By 1015 GMT, the price of 3-Month copper on London Metal Exchange (LME) increased 0.3% to $9,330 per tonne on light trading.
Despite markets in China, the world’s largest buyer of metals, being closed this week due to the Lunar Chinese New Year holiday. Copper has gained 12% far in 2018. On Monday, Shanghai Futures Exchange will reopen.
Surge in Metal Prices
The gains are primarily attributable to bullish investors who believe that the reopening of the second-largest economy in the world will increase business activity as well as metals demand.
“I predict that the industry has a significant amount of upside left. There are now relatively few long holdings, so there is potential to enhance that. There is no long trade that is pack “said Gianclaudio Torlizzi, a partner at the Milan-base consulting firm T-Commodity.
He disagrees with the opinions of some investors and analysts who claim. That the market have overshot because of current level of physical demand is low and a rebound will take some time.
“Because they are viewing it through a Western lens, people tend to underestimate the openings in China. I am old enough to understand that the Chinese economy grows quickly when they chose to do so “said Torlizzi.
However, Swift economic reopening after roughly 3 years of strict covid restrictions could provide a much-needed push to global economic development. But it may also drive inflation just when it appears to be cooling.
The recovery of the 2nd largest global economy. Which itself comes up to be its major consumer of commodities, poses a threat to this year’s worldwide prices of food, industrial metals, and energy prices.
According to Daniel Major, a metals & mining senior analyst at UBS, metals such as copper and aluminium are “not a very substantial portion of the entire inflation basket.“
However, if worldwide energy and food prices begin to increase once again, this could result in increased consumer prices.
Delhi Metal Market
Since the start of January, The Delhi Metal Market is experiencing a metals shortage. BY 1045 GMT, The prices for copper scrap have risen to 701+GST Per/kg. Aluminium scrap to 167+GST Per/kg, and zinc scrap to 216+GST Per/kg, surging by an overall average of almost 13% .
Tin, which is mostly used to build electronics, has increased 30%. And reached its highest level in 32 years at 2575+GST Per/kg.
Reassuring U.S. GDP and inflation data released on Thursday also gave the financial markets a boost.
The market has also been help by low inventories.
The LME copper stocks falling to 73,975 metric tonnes on Friday to their lowest level in more than ten months.