Copper prices at record high as commodities bull market takes shape

Written by: Faith Maina
February 23, 2021
  • On Monday, copper prices hit a 10-year high by surpassing the $9,000 per tonne mark.
  • As predicted by analysts, 2021 would be onset of a years-long commodities bull market.
  • The demand for copper is on the rise as governments focus on electric vehicles and renewable energy programs.

On Monday, copper prices at the London Metal Exchange surpassed the $9,000 per tonne level to trade at its highest price since September 2011. Similarly, the red metal was trading at its highest since August 2011 at $10,4433.6 per tonne. In New York, the prices were rose to a 10-year high of $9,019.16 per tonne ($4.0910 per pound). While copper prices pulled back on Tuesday to trade at $4.1155 per pound, the uptrend continued with the prices reaching $4.1155 per pound as at 14.47 GMT.  

copper prices

Commodities bull market

After the economic turmoil in 2020, 2021 was poised as the recovery year. The commodities market was presented as one of the best bets for investors. According to Goldman Sachs, the sector was set for a bull market and would be the most suitable hedge against inflation.

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Last week, the chairman of the University of Akron Endowment Fund, Dennis Gartman noted that the cycle has begun. While on Bloomberg, Gartman cited the dramatic rallying of various commodities such as corn, soybeans, and copper.

He stated, “…there’s something more going on that just a mere bounce from the lows. The bear market that has existed for more than a decade has ended. The bull market that will probably last for a long period of time has begun.”

Other analysts from major entities such as JPMorgan Chase, Ospraie Management LLC, and Bank of America hold a similar position. In line with the new supercycle, Goldman Sachs has adjusted its target for copper prices on the upside. Based on the expected copper supply deficit, the bank predicts that the red metal will hit a record high of $10,500 per tonne in 12 months. This is an increase from its previous target of $10,000 per tonne. Its 3 and 6-month targets are now at $9,200 and $9,800 per tonne, up from $8,500 and $9,000 per tonne respectively.   

Demand for copper surges

On Monday, three-month copper prices hit and surpassed the $9,000 price level at the London Metal Exchange (LME). The red metal reached $9,187 per tonne, which is its highest price since September 2011. This placed the contract at about 10% lower than the $10,190 per tonne set as an all-time high in February 2011.  

In Shanghai Futures Exchange, April’s copper futures were up by 6% to $10,433.6  per tonne (67.370 yuan), which is its highest level since August 2011.  

The rallying of copper prices is a reaction to the rising demand from China and other regions across the globe. As economic recovery takes shape worldwide, investors whose interest is to trade precious metals are betting on a tight copper supply.

Besides, the federal governments of influential regions like China, the U.S, and Europe have heightened their focus on the green economy. These countries are set to spend heftily on infrastructure projects related to electric vehicles and renewable energy. Copper’s expansive use in the construction and electrical industries has increased its demand significantly.