Foreign media are reporting that copper prices, considered an “economic barometer,” have risen to a nine-year high, doing more harm than good for some processors in the world’s largest copper market.
China’s huge copper processing industry, which supplies more than half of the world’s refined copper, has seen inventories of copper products rise to record levels as soaring prices cause customers to stop and buyers to stop. As Chinese demand is so important to the fate of the market, a turn in weaker factory demand could throw a wrench in the price rally.
According to data from Shanghai Nonferrous Metals, smelter stocks of copper cathodes rose to more than 90,000 tons last month, the highest level since 2010 data.
Meanwhile, some investors in China are starting to back off as consumption turns weaker. Shanghai Continental Futures, which built a good position in copper worth more than $1 billion in February, has scaled back the size of the position by nearly a fifth in recent days.
After closing higher in February, the market has been in a bit of a quandary. Investors are on the one hand optimistic that the world’s economic recovery and transition towards green energy will cause a shortage of copper, but on the other hand are aware that the Chinese government is already planning to cut spending on pro-growth measures as recovery from the Epidemic is almost a certainty.
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