The global energy crisis that has led to power shortages and factory slowdowns did not stop copper prices from rallying to their highest levels since the beginning of August.
On Wednesday, copper futures for December delivery erased earlier losses to trade at $4.499/lb for a gain of 4.0% as of 3:40 p.m. EDT. The intraday high was $4.528/lb.
[Click here for an interactive chart of copper prices]
The rebound in copper prices comes amid short-term concerns surrounding China and its debt-addled property sector, plus the ongoing economic threat posed by the covid-19 delta variant.
“In the short term there are some headwinds, mainly due to concerns about China’s economy,” Jay Tatum, portfolio manager at New York-based Valent Asset Management, recently told Bloomberg.
“But once the world gets back to normal growth rates, evenly spread across the economy, we still think there’s a strong case to be made for metals like copper.”
Not everyone is convinced that copper’s outlook is rosy.
The International Monetary Fund has expressed concern that the world’s economic recovery, which drove copper’s blistering rally in May, has lost momentum and become increasingly divided.
Citigroup — one of the biggest cheerleaders for copper earlier this year — recently warned Bloomberg that prices could fall another 10%, with demand shrinking over the next three months.
“What tipped me over the edge in terms of becoming outright bearish was the power, coal and gas crisis,” said Max Layton, managing director for commodities research at Citigroup in London told Bloomberg. “The concern is that it gets a lot worse.”
Data on Wednesday also showed that the world’s top consumer has been picking up imports to counter its supply worries, which briefly drove down the price of copper.
(With files from Bloomberg and Reuters)