The price of copper climbs over £7 / kg as the global economy recovers and environmental concerns push forward electrification projects.
Bonded stock levels have fallen back to 132 kT despite miners suspending planning maintenance to maximise output.
Where next for copper ?
All copper users will be frantically trying to reprice their stocks and goods to reflect the higher price. Anyone holding copper stock can make significant gains, as long as they reprice their goods. Anyone stuck with fixed price contracts will be suffering. Anyone buying copper will be minimising what they have to buy.
Producers will be working overtime to maximise their output, postponing non essential maintenance, bringing forward expansion plans and trying to lock in future contracts.
Traders will be trying to match buy and sell orders to minimise exposure.
Speculators will be wondering how much further the bull market has to run. Consumer markets are coming out of lockdown but producing countries are still experiencing waves of Covid and struggling to get hold of vaccines. How much might that impact supply side and what impact will removing financial support in consumer markets have on their economies ?
Lots to ponder and my view is still that copper is overpriced, but the key will be supply vs demand and that can best be tracked in stock levels, which right now are indicating that prices will be remain high for a while.
