Copper Hits Highest Since 2011 as Global Recovery Powers Metals

Copper climbed to the highest in almost a decade as the global recovery from the pandemic extended a rally in metals markets. Three-month copper on the London Metal Exchange rose to $10,040, its highest level since February 2011 when the contract hit a record high of $10,190 a tonne. Aluminium advanced to $2,438 a tonne, nickel increased to $17,855 a tonne and tin climbed to $29,465 a tonne. There are various reason for surge in copper price.
Governments around the world have pledged to reach zero net carbon emissions by around mid-century, while the US rejoining the Paris Agreement late last week signals President Joe Biden’s administration’s emphasis on tackling climate change. This has helped drive demand for copper, as well as green energy initiatives that are sprinkled throughout President Joe Biden’s $2.2 trillion infrastructure proposal.
Copper, which is used in wiring, is expected to benefit from greater demand for electricity in a shift away from fossil fuels. In addition, a larger portion of future power generation is expected to come from renewable energy such as wind farms, which use more copper.
Copper is increasingly needed in the production of electric vehicles, which require close to 200 pounds of the metal in a single vehicle. Gas-powered vehicles on the other hand only require about 20 to 50 pounds of copper. UK-Australian firm BHP last week said it has a positive demand outlook, which is by growing exposure to the global trend towards electric batteries.
Another main reason is that Copper production declined in 2020 due to government restrictions and lockdowns during the Covid-19 pandemic. The world’s largest copper producers, Chile and Peru, were hit especially hard by the pandemic, which could impact supply.
In the near-term, mined copper production has been impacted by the Covid-19 pandemic in Peru, the world’s second-largest producer.
Mined copper production in Chile, the largest global producer, was largely unaffected in 2020 by the pandemic. But Port workers in Chile, are scheduled to begin protests over President Sebastian Pinera’s move to block a bill allowing people to make a third round of early withdrawals from their pension funds. Earlier this month, prices spiked following Chilean border closures related to the pandemic.
That’s coming alongside a continued economic boom in China, where a push to reduce carbon emissions is taking place.
Some manufacturers and end-users have been slowing production or pushing back delivery times after costs surged, while weaker-than-expected domestic consumption has opened the arbitrage window for exports.