Copper Extends Rally to Top $10,000 With All-Time High in Sight

(Bloomberg) -- Copper topped $10,000 a metric ton for the first time since 2011, nearing the all-time high set that year as rebounding economies stoke demand and mines struggle to keep up.

Prices rose as much as 1.3% to $10,008 a ton on the London Metal Exchange, before slipping back to trade near unchanged. The metal hit a record $10,190 in February 2011.

Copper has been among the best performers in a month where metals ranging from aluminum to iron ore have surged to the highest in years. The rally is being fueled by stimulus measures, near-zero interest rates and signs that economies are recovering from the virus pandemic. A push toward cleaner energy sources is also seen boosting consumption of copper, used in everything from electric vehicles to solar power systems, further straining supplies.

“This is a remarkable run for copper in terms of magnitude and consistency,” said Tai Wong, head of metals derivatives trading at BMO Capital Markets. “The all-time high at $10,190 is just around corner and now practically a foregone conclusion.”

Investors have piled into copper, with aggregate open interest in Shanghai Futures Exchange copper contracts at the highest in more than a year and hedge fund managers boosting bullish Comex copper bets in the week ended April 20.

With copper demand set to soar once more, there are mounting concerns that producers will struggle to plug the gap as they battle a host of technical and regulatory pressures. In the longer term, producers worry that plans to boost mining royalties could stifle investment.

Prices have doubled from lows in March, along with a surge across raw materials from oil to agriculture. That’s spurring debate about whether the current boom may herald a so-called commodities supercycle.

It has also helped push mining shares to multiyear highs.

“The copper price has gone stratospheric and probably has further to go, which is a boon for miners who are currently making at least two dollars for every one they spend getting metal out of the ground,” said Robert Edwards, Principal Analyst, base metals at CRU Group.

Copper pared earlier gains as the dollar advanced, reducing the appeal of the metal for investors holding other currencies. For the day, the metal rose 0.1% to settle at $9,885 a ton on the LME. Other metal were mixed in London, with aluminum climbing to a three-year high and nickel falling.

“The copper rally still has legs to go,” said Wenyu Yao, senior commodities strategist at ING Bank. “The outlook for the U.S. economy keeps getting better. Economic reopening coupled with massive stimulus, faster-than-expected vaccine rollouts and supportive fundamentals all point to even higher prices.”

With copper prices nearing record highs, Newmont Corp., the world’s largest gold producer, is looking to increase output of the metal through several “mega projects,” Chief Executive Officer Tom Palmer said on an earnings call Thursday. Even if just one materializes, copper will account for 15-20% of the company’s total output by the end of the decade, he said.

“I’m pretty excited about having good exposure to copper at that time when the world is going through the energy transition,” Palmer said during an interview with Bloomberg TV after the earnings call. “I think copper’s got a pretty good story in front of it. I think its day in the sun is more toward the end of this decade.”

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