Copper prices rose again on Tuesday with investors weighing prospects for a fast-tracked stimulus package in the US.
On the Comex market, copper for delivery in March advanced 1.5% to $3.723 a pound ($8,190 a tonne). If it closes at these levels it would be the highest since February 2013.
The metal has rallied on hopes that economic stimulus in the US will further boost demand, and underpinned by decade-low China stocks.
House Democrats on Monday released the first draft text for key pieces of legislation that will comprise President Joe Biden’s covid-19 relief bill. Democrats are forging ahead with plans to bump the federal minimum wage to $15 an hour by 2025 and make another round of stimulus payments. Billions of dollars are planned for airline staff, airports and trains.
Stocks of copper across the LME, Comex and ShFE markets are at multi-year lows.
“Inventories are still quite low on exchanges. That gives good indication that manufacturing demand for copper is present and that its not just a speculative story,” Nitesh Shah, an analyst at investment manager WisdomTree, told Reuters.
In China, the world’s top consumer, copper inventories normally accumulate in the run up to the Lunar New Year as businesses close for the week-long festivities.
But this year, Chinese inventories have dropped to near decade lows on robust demand from factories, which are maintaining high operating rates due to shortened shutdown periods and tighter travel restrictions for workers.
Meanwhile, effects of the coronavirus pandemic on copper supply continues to be felt. In what was supposed to be a year of supply growth, global mined output during the first 10 months of 2020 was 0.5% lower compared to 2019 levels, according to the International Copper Study Group (ICSG).
In Peru, the world’s second-biggest producer, copper output plunged 12.5% to 2.15 million tonnes in 2020, the country’s Energy and Mines Ministry said on Monday.
(With files from Reuters and Bloomberg)