Copper enjoys best quarterly performance since 2010 following lockdown rebound

A REBOUND in demand from China and supply concerns regarding South American producers has taken copper to its best quarterly price performance since 2010, said Bloomberg News.

The metal has surged about 20% this quarter, and climbed above $6,000 a metric ton last week for the first time since the COVID-19 outbreak became a global pandemic.

“The basis of the copper rally was three-legged,” Tai Wong, head of metals derivatives trading at BMO Capital Markets, told the newswire.

“The Chinese economic recovery, despite clear warning signs, has surprised strongly versus market expectations; COVID-related supply disruption has been growing rapidly; and traders were fairly short copper and were forced to grudgingly cover throughout the quarter and are now finally small long,” said Wong.

Optimism for copper surged after certain countries emerged from lockdowns; even when lockdowns were reimposed, there was support from fiscal stimulus efforts, said Bloomberg. A report on Friday showed that hedge funds cut bearish bets on US copper futures and options to the lowest since 2018.

There’s growing risk to mining in top producer Chile given the continued spread of the virus there, Morgan Stanley analysts said in a June 29 note.
The bank estimates global mine-supply losses of 560,000 tons this year – most of that due to COVID-19 – and sees demand outstripping production amid mined- and scrap-supply disruptions, said Bloomberg News.

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