Copper price achieved its biggest monthly increase in four years

        Copper prices achieved their biggest monthly increase in more than four years on Friday, and traders bet that the global economic recovery affected by the epidemic will lead to a sharp increase in demand for industrial metals.

　　Jeff Clareman, portfolio manager of GraniteShares, the issuer of exchange-traded funds, said: "The increase in copper prices is due to actual and expected demand, from expectations of a strong post-coronavirus recovery, as well as concerns about supply shortages and a weak dollar. "


　　According to Dow Jones market data, the price based on the most active copper futures contract rose more than 15% at the close of February. This is the best monthly performance since November 2016.


　　Clareman said that China's demand has increased significantly, and China accounts for 55% of global copper consumption. But at the same time, the London Metal Exchange's inventory level has fallen to a 15-year low, and the output of Peru, the number one producer, has also declined. It is expected that a huge copper "deficit" will be generated this year and even the next few years.


　　The International Copper Research Group stated in a report released on February 22 that the preliminary balance of world refined copper in the first 11 months of last year showed that the deficit in 2020 was about 590,000 tons. The group’s reasoning was that “China’s consumption is strong”.


　　Dawei Gong, the asset management (DWS) Group’s portfolio manager and head of commodities, said that copper supply has been “stable” with an annual growth rate of approximately 2% to 3%. DWS Group has not seen any announcements about new capital expenditures by copper mining companies. News, this will increase the expected supply, rather than a gradual increase.


　　He said that since March last year, China's strong industrial activity may continue, although abroad, due to the impact of the epidemic, the current industrial activity is still very flat. However, the successful development of vaccines and the relatively effective vaccine delivery so far provide investors with an optimistic attitude.


　　Gong Dawei said that with the policies promoted by US President Biden to promote alternative fuels and renewable energy, many investors have set prices for the higher expected demand for copper. Copper is used in renewable energy systems. At the same time, infrastructure investment from the United States and other countries will also affect metal prices, but disappointment in the realized infrastructure spending will be a downside risk.


　　Clareman said: "At present, due to concerns about rising interest rates, copper has fallen from recent highs, but other conditions continue to support prices."