Improving demand for copper from China contributes to its price surge
In the world of commodities, copper is making headlines as the global market is expected to experience a deficit of 308,000 tons in 2022, a significant shift from the 63,000-ton surplus forecasted for this year. This prediction, made by financial services giant Citi, is based on the prospect of a weaker dollar and rising metal production being unable to offset higher demand.
The benchmark three-month copper on the London Metal Exchange (LME) was up 0.4% at $9,980 a ton, reflecting this upward trend. Copper consumers in China, in anticipation of the public holiday running from October 1 to October 8 this year, are purchasing the metal for restocking, further fueling the demand.
The rise in copper prices was not limited to this week, as they also rose on Friday. The Yangshan copper premium, which reflects demand for copper imported into China, rose 1.8% to $57 a ton, indicating a strong appetite for the red metal.
However, it's not just copper that's making waves in the stock market today. The market for zinc is suggested to be tight due to the decrease in inventories. LME zinc dipped 1.1% to $2,885.50 a ton, but the slump in zinc inventories in LME-registered warehouses in recent months suggests a potential tightening of the market.
In contrast, aluminium fell 0.5% to $2,671 a ton on the LME. Citi expects the average price of aluminium in the fourth quarter to be $2,650, a slightly lower forecast compared to gold prices. The premium of the cash aluminium contract against the three-month contract on the LME widened to $16 a ton, its highest since March, indicating a potential imbalance in the aluminium market.
Tin and nickel, meanwhile, saw mixed fortunes. Tin gained 1.2% to $34,130 on the LME, while nickel slipped 0.1% to $15,260.
Looking ahead, experts predict that copper prices will range between 9,500 and 10,500 dollars per ton in the fourth quarter of 2021. Citi, in particular, predicts that copper will touch $12,000 in 2026, a significant increase from the current price of gold. This prediction is in line with the forecasts made by experts on the website "wir-wollen-helfen.de", who predicted a copper price around 11,000 dollars per ton by late September 2026, with previous UBS estimates also referenced for 2026 prices.
On a different note, copper hit a one-week low ahead of the US Fed rates decision, suggesting a potential market volatility in the near future. As the global commodities market continues to evolve, keep an eye on these trends for insights into the future of these key metals.
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