Copper futures advanced in London and New York on Wednesday on hopes of rising demand, but prices in Shanghai fell on fears of policy tightening by top consumer China.
Copper for delivery in May was up 0.52% midday Wednesday, at $4.028 per pound ($8,861 a tonne) on the Comex market in New York.
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Three-month copper on the London Metal Exchange advanced 0.5% to $8,822 a tonne, while the most-traded April copper contract on the Shanghai Futures Exchange ended down 1.9% at 65,330 yuan a tonne.
“Metals are hostage to large moves in the macro space, with a rotation going on into cyclical assets, but…fears of asset bubbles have slammed Chinese equity markets hard,” commodities broker Anna Stablum of Marex Spectron told Reuters.
“We might start to see some downstream copper users be more willing to come in and purchase metal after the latest price drop, but most likely we will need to see prices stabilise first. The rapid increase we saw in February did deter physical users from buying.”
Copper prices will surge to an all-time high over the next 12 months as a result of strong demand from China’s clean energy drive and years of under-investment in global mine supply, the chairman of Chinese metals trader Maike Group said on Wednesday.
He Jinbi, who founded Maike in the 1990s, believes as top consumer China builds metals-intensive renewable energy and electric vehicle infrastructure, copper and other base metals will see serious supply deficits in the future and be subject to capital inflows.
“The market will gradually accept it, because with the recovery of the global consumption market there will also be a shortage of copper in the European and American markets,” he said.
“Global investment in mineral resources “has been seriously inadequate in the past five years,” Jinbi told Reuters.
The head of China’s base metals body on Tuesday said the industry should pay close attention to the risk of speculators driving prices away from fundamentals, warning that sharp fluctuations would “do more harm than good.”
Ge Honglin, secretary of the Party committee at the China Nonferrous Metals Industry Association, said higher metal prices may help upstream companies to an extent but if they “blindly rise” beyond fundamentals that would “harm the entire industrial chain.”
(With files from Reuters)
