Copper hits highest since 2012 on inflation concerns and healthy demand

LONDON: Copper prices jumped to their highest since 2012 on Monday as investors continued their buying spree on concerns over rising inflation and stronger than expected demand in top metals consumer China.

Three-month copper on the London Metal Exchange (LME) was up 0.8% at $8,395 a tonne at 1700 GMT, its highest since September 2012.

“There’s a very, very strong focus on reflation and there’s also a feeling that Chinese demand is not going to be as weak as in previous new years because travel restrictions are keeping more production capacity open,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Chinese markets are closed for the Lunar New Year holiday until Feb. 17, but factories are maintaining higher operating rates than usual for the holiday period.

Hansen said the technical picture for copper was bullish because of an uptrend channel that has persisted since last March.

“The upper bound of that channel is $8,700, so there’s another $300 and that’s going to be the next target for copper,” he said.

ANZ has set a 12-month target price of $9,000 a tonne for the metal often used as a gauge of global economic health.

“With environmental policies accelerating the use of copper, we see the market remaining tight this year,” said Daniel Hynes, senior commodity strategist at ANZ.

Cash LME copper’s premium to the three-month contract rose to $25 a tonne, its highest since last September, indicating tight near-term availability of material.

LME inventories have slid 44% over the past two months. Nickel rose as much as 1.2% to $18,785 a tonne, its loftiest since September 2019, before paring gains to $18,620 for a gain of 0.3%. Broker Marex Spectron said the net LME speculative long position in nickel had climbed to 14% of open interest, its highest since 2019.

LME aluminium shed 0.3% to $2,083 a tonne and zinc added 0.3% to $2,841.50. Lead slipped 0.2% to $2,115 after touching its strongest since November at $2,145. Tin advanced 2.8% to $24,300, having jumped more than 5% to $24,875, its highest since February 2013.