Copper prices hit their highest levels in nearly a decade today as Chinese demand and the global economic recovery extended the red metal’s rally.
For the third session in a row London Metal Exchange copper hit fresh multi-year peaks, having rallied by 93 per cent since last March.
LME copper pushed up 0.3 per cent to $8,416.50 by the midmorning. Earlier it hit $8,437, the highest price since May 2012.
Trading was light as mainland Chinese markets are closed for the Lunar New Year holiday until Wednesday.
The surge in price comes amid a general rally in global commodities, which has led some banks to declare the advent of a new price “supercycle”.
However, analyst Carsten Menke at Julius Baer in Zurich is as yet unconvinced.
“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 traveling 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.
However, in the short-term, the surge in prices is looking beneficial for the world’s mining giants.
Glencore shares rose 3.3 per cent this morning after the Anglo-Swiss giant announced that it was reinstating its dividend.
The firm beat expectations for core profit, largely on the strength of its metals trading division.