Copper touches fresh 2012 peak in thin trade on recovery hopes
- Tuesday is the third successive session that LME copper has hit fresh multi-year peaks, having rallied by 93% since March last year.
- Some investors see current high prices as the start of a new bull market, but analyst Carsten Menke at Julius Baer in Zurich is wary.
LONDON: Copper prices briefly touched their highest since 2012 on Tuesday, extending a bull run driven by optimism over Chinese demand and global economic recovery, before pulling back in thin trade.
Tuesday is the third successive session that LME copper has hit fresh multi-year peaks, having rallied by 93% since March last year.
Benchmark copper on the London Metal Exchange had edged up 0.3% to $8,416.50 by 1050 GMT, after hitting $8,437, its strongest since May 2012.
Trading was light as mainland Chinese markets are closed for the Lunar New Year holiday until Wednesday.
Some investors see current high prices as the start of a new bull market, but analyst Carsten Menke at Julius Baer in Zurich is wary.
"We're not jumping on this supercycle train, which seems to have already left the station," he said.
One justification for the latest surge in prices is that lockdown restrictions in China mean many people are not travelling and factories are staying busy.
"This has added another leg to the bull narrative, but in the end this will just be pulling forward demand and production, which would happen anyway at a later stage."
China's transition from an investment-driven economy to one focused on consumption will mean less metals-intensive growth going forward, Menke added.
Helping support metals, a weaker dollar index hit a three-week low, making greenback-priced metals cheaper for buyers using other currencies.
For calendar 2021, Chinese demand is expected to be roughly 5% higher than in calendar 2019, but supply constraints remain in pandemic-hit Chile and Peru, the world's two largest exporters of primary copper, mining giant BHP Group BHP said.
Aluminium slipped 0.1% to $2,082 a tonne, after hitting an eight-week high of $2,095 on Monday. Zinc was barely changed at $2,843 and lead dipped 0.2% to $2,119.
Nickel was little changed at $18,625, still supported after hitting its best level since September 2019 on Monday, while tin gained 0.6% to $24,535.
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