Copper prices moved above $9,000 a tonne on Wednesday for the first time since June on hopes that Chinese demand will rebound after the country removed its covid-19 restrictions.
China’s retreat from its Covid-Zero has caused a huge spike in infections, but investors expect it to lift metals demand throughout the year.
Copper for delivery in March rose 4.2% on the Comex market in New York, touching $4.17 per pound, or $9,174 per tonne.
[Click here for an interactive chart of copper prices]
“It does look as if the covid wave (in China) has peaked already and that we could see a rapid pickup in activity from now,” said Capital Economics analyst Caroline Bain.
“You’ve got more of these commodity trade adviser and discretionary fund bids on copper,” said Alastair Munro, an analyst at Marex. “There has been Chinese buying onshore.”
The copper rally comes when stockpiles held by exchanges remain low after a year when production was hit by energy shortages in Europe and China. Jeremy Weir, chief executive officer of Trafigura Group, said metals markets have never been tighter.
Metals are also receiving support from the weaker dollar, which has slid to near a seven-month low as traders see the Fed turning less hawkish after cooler inflation and employment data.
Copper may reach $11,500 a tonne by the end of this year, Goldman Sachs Group analyst Jeff Currie said in a Bloomberg TV interview.
The rally fed through to producers, with shares in BHP Group up 6%, Glencore plc up 6.3%, and Freeport-McMoRan up 15%, compared to the previous week.
(With files from Reuters and Bloomberg)