Copper prices extend gains amid heightened hopes of the US stimulus
- Copper prices are up for the third consecutive session, trading at around $3.6930.
- The uptrend in various markets is due to the increased hopes of the US stimulus package.
- While January's Chilean copper exports dropped by $1,014 million, trade balance is at the highest since 2012.
Copper prices extended its gains for the third consecutive session. On Tuesday, copper futures were up by 0.74% to trade at $3.6930. This is its highest price level since mid-January 2021. A bullish Chilean trade balance and heightened hopes of the US stimulus package have contributed to the surge.
Heightened hopes of the US stimulus package
Copper prices are reacting the positive sentiment triggered by the hopes of the US stimulus package. On Friday, Congress voted in favour of the budget plan that the Senate had approved earlier in the day. With the lawmakers approving the stimulus proposal, President’s Biden $1.9 trillion relief package is now on course to becoming legislation. The bill’s progress comes despite its lack of support from the Republicans.
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Nancy Pelosi, the House Speaker, stated that she is keen on having the bill pass within the next weeks. The passing of the relief package comes at an opportune time as the unemployment aid expires in mid-March.
For the bulls looking to invest in commodities, this has come in as good news. The relief package is set to stimulate the recovery of the US economy, which is ranked top in the world. Besides, it will increase the demand for industrial metals and commodities in general. With the red metal often reflecting the stability of the economy, the escalated hopes of a pre-pandemic norm have pushed copper prices higher.
Indeed, copper is not the only commodity that has seen its prices surge. Crude oil prices rose as Brent futures surpassed the psychological price level $60 to trade at $60.68. WTI futures also rose by 1.98% to $58.08.
Similarly, the Dow Jones Industrial Average is at a record high of $31385.8. S&P 500 is also trading at its highest level at $3915.6. In the metal front, aluminium prices are up by 0.55% at $164.75 while silver prices rose by 1.34% at $27.256.
Chilean data on exports and imports
Copper prices are further reacting to Monday’s data on the Chilean exports and imports. Chile is the leading producer of copper in the world. According to the country’s central bank, copper exports were at $2,733 million in January. This was a decline from the previous month’s $3,747 million. In December 2020, the figures were at a 3-year high.
Overall, Chilean exports dropped from the previous $7,143 million to $3,268 million. However, the trade balance turned out bullish for the Chilean Peso. At 1.74 billion, the reading is higher than the prior month’s 1.42 billion. Subsequently, it is the highest figure since May 2012, a factor that has helped push copper prices higher.