Copper prices pushed towards two-year highs on Tuesday, with the benchmark copper on the London Metal Exchange (LME) rising 0.8% to $9,989 per metric ton. Prices hit a two-year peak of $10,208 last week, as focus returned to tight supplies and hopes of stronger demand in top consumer China.
Analysts expect supply deficits this year and beyond as demand from electric vehicles and new technologies such as artificial intelligence and automation accelerate. A potential merger between BHP and Anglo American, which would create an entity controlling 10% of global copper supplies, has further fueled concerns about tightening supplies.
China’s top decision-making body last week said it would step up support for the economy with prudent monetary and proactive fiscal policies, including interest rates and bank reserve requirement ratios (RRR). Traders also noted reports that China’s Shenzhen city was relaxing home purchase restrictions in some districts, which could boost demand for industrial materials like copper.
Additionally, falling copper stocks in LME-registered warehouses, which have dropped 35% to 107,350 metric tons since the start of the year, have contributed to the price rally.
“The supply picture, while improving, remains precarious. Mines are just one strike or natural disaster away from seizing up yet again,” said Marex consultant Edward Meir. “Moreover, scrap remains limited, despite a strong rally in copper prices. Scrap units that normally seep into the market on the back of such strength never materialized.”
In other metals, aluminum, zinc, lead, and tin also saw price increases, while nickel slipped by 1.2% to $19,000 per metric ton.