Copper climbed to the highest in almost a decade as the global recovery from the pandemic extended a rally in metals markets. Aluminum is surging and iron ore jumped to a fresh high as commodities advance toward the highs of the last supercycle. Metals are benefiting as the world’s largest economies announce stimulus programs and climate pledges as they rebuild from the coronavirus shock.
The US recovery is accelerating and President Joe Biden’s $2.25 trillion infrastructure plan will highlight sectors like electric cars, driving further gains in commodities critical to the green-energy transition. That’s coming alongside a continued economic boom in China, where a push to reduce emissions is filtering through to supply cuts for some metals just as demand is picking up.
Analysts say that this bullish outlook is led by decarbonization drive all across the world supported by the scale of global stimulus.
Copper — a bellwether for the global economy — rose as much as 2.4% to $ 9,780 a tonne in London last week, the highest since August 2011. The metal has gained 26% on the London Metal Exchange this year. Iron ore in Singapore jumped to its highest since contracts launched in 2013, while Chinese steel futures reached fresh highs.
Copper’s integral role in everything from electrical wiring to motors is fanning expectations for further gains as nations roll out more aggressive climate targets. Goldman Sachs expects the metal to top 2011’s record of $10,190 and surpass $15,000 in the coming decade as demand outstrips supply.
However, a rise in coronavirus cases and new variants threaten to derail reopening plans in some regions such as India, while investors are concerned about a possible pullback in Chinese stimulus.
Supply woes can’t be ruled out either. Port workers in Chile, which accounts for about a quarter of the world’s copper supply, are scheduled to begin protests over President Sebastian Pinera’s move to block a bill allowing people to make a third round of early withdrawals from their pension funds. The threat of Covid-19 in nations in South America could further restrict the export of key industrial commodities like iron ore and copper.