LONDON: Copper prices pushed towards two-year highs on Tuesday as focus returned to tight supplies and hopes of stronger demand in top consumer China, where authorities are planning further measures to prop up the economy.
Benchmark copper on the London Metal Exchange (LME) was up 0.8% at $9,989 a metric ton in official rings after touching $10,118. Prices hit a two-year peak of $10,208 last week.
“This is all about future supplies, or the lack of,” one trader said, adding that BHP’s takeover bid for Anglo American is all about copper and that Chinese buyers are back in the market after last week’s public holidays. Analysts expect supply deficits this year and beyond as demand from electric vehicles and new technologies such as artifical intelligence and automation accelerate.
A BHP and Anglo American tie-up would create an entity that controls 10% of global copper supplies, surpassing Chile’s Codelco and Freeport-McMoRan. China top decision-making body last week said that it would step up support for the economy with prudent monetary and proactive fiscal policies, including interest rates and bank reserve requirement ratios (RRR).
Traders say reports that China’s Shenzhen city was relaxing home purchase restrictions in some districts in an attempt to boost the property market - a major consumer of industrial materials - had also had boosted appetite for LME copper.
Also helping were falling copper stocks in LME-registered warehouses, which have dropped 35% to 107,350 metric tons since the start of the year. “The supply picture, while improving, remains precarious. Mines are just one strike or natural disaster away from seizing up yet again,” said Marex consultant Edward Meir.
“Moreover, scrap remains limited, despite a strong rally in copper prices. Scrap units that normally seep into the market on the back of such strength never materialised.”
In other metals, aluminium rose 0.2% to $2,551.5 a ton, zinc was up 0.5% at $2,903, lead climbed 1% to $2,238, tin added 1.2% to $32,375 and nickel slipped by 1.2% to $19,000.
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