Copper prices will surge to an all-time high over the next 12 months as a result of strong demand from China’s clean energy drive and years of under-investment in global mine supply, the chairman of Chinese metals trader Maike Group said on Wednesday.
Benchmark prices for copper, widely used in power and construction, hit a 9-1/2 year high of $9,617 a tonne on the London Metal Exchange on Feb. 25, within striking distance of the all-time peak of $10,190 set in 2011, partly driven by optimism over coronavirus-related fiscal stimulus.
The metal has since eased to around $8,900 but He Jinbi, who founded Maike in the 1990s, believes as top consumer China builds metals-intensive renewable energy and electric vehicle infrastructure, copper and other base metals will see serious supply deficits in future and be subject to capital inflows.
“The price of copper will hit a record high in the coming year,” He, a delegate at the National People’s Congress (NPC) in Beijing, said in a written response to Reuters questions.
“The market will gradually accept it, because with the recovery of the global consumption market there will also be a shortage of copper in the European and American markets,” he explained, adding that global investment in mineral resources “has been seriously inadequate in the past five years.”
The Maike boss is submitting a proposal at this year’s NPC meeting calling for better coordination on a strategic metals reserve in China.
“Don’t focus on market prices too much. When to stockpile, what to stockpile and how to stockpile – these are questions the relevant national departments should think about,” he said.
Hundreds of proposals are typically submitted at the annual gathering, although most are suggestions by individual delegates and are not discussed in parliament.
Click here for an interactive chart of copper prices.
(By Tom Daly and Min Zhang; Editing by Louise Heavens)