Copper prices rose on Friday, tracking gains in the equities market buoyed by optimism over the global economic recovery on positive US labour data and its faster-than-anticipated covid-19 vaccination roll-out plans.
Copper for delivery in May was up 2.11% by midday, with futures touching $4.06 per pound ($8,932 a tonne) on the Comex market in New York.
Equities markets rose as the United States completed its 100 million covid-19 vaccine shots 42 days ahead of schedule and posted a drop in unemployment benefits claims.
“Dow futures have rallied by some 130 points … and metals are duly following its lead,” Malcolm Freeman, a director at UK broker Kingdom Futures told Reuters.
The gradual slide in industrial metals prices, however, continued this week.
Source: Capital Economics
“The main news of the week – the blockage of the Suez Canal – failed to give a lift in prices, probably because the trade-in refined metal will be largely unaffected,” said Capital Economics’ commodities team on its weekly wrap.
“We had always suspected that the rally in the copper price could not be justified by underlying fundamentals and we expect further falls later this year.”
The bull and bear case for copper price
Industry opinion is strongly – and evenly – divided between the two camps.
“Bears will point out that this year’s price spike occurred during Lunar New Year when Chinese traders were away, indicating that the surge was largely speculatively driven, without much fundamental support and during the quiet season for consumption in the Rest of the World,” said Roskill.
“The bulls rightly argue that with the Mainland’s fabricators reigniting their furnaces from maintenance shutdowns demand will pick up sharply,”
Chinese industrial production surged 35% yoy in Jan-Feb 2021.
“Any meaningful disruption to supply will quickly create physical shortages that would push cathode premiums and prices sharply higher,” said Roskill.
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