① The price of three-month copper on the London Metal Exchange once rose more than 1.7%, returning above 10,000 US dollars per ton after a lapse of two years; ② analysts believe that the reason for the steady rise in copper prices is because outsiders speculate that it may be difficult for global mines to meet the upcoming wave of green industry demand.
Finance Association, April 27 (Editor Zhao Hao) On Friday (April 26), the price of basic metals on the London Metal Exchange (LME) generally rose during the European session. Among them, 3-month copper rose more than 1.7% at one point, returning above 10,000 US dollars per ton after a lapse of two years.
As of press release, copper futures have reduced some of their intraday gains to around 1.1%, and are now reporting $9,974 per tonne, and have accumulated over 16% year to date. Meanwhile, the price of copper futures on the New York Mercantile Exchange also increased by more than 0.7%.
LME copper futures monthly chart
Analysts believe that the reason for the steady rise in copper prices is because outsiders speculate that global mines may be difficult to meet the upcoming wave of green demand. According to information, large mines have become more difficult to excavate, and the cost of construction and expansion has also become higher.
But over the next few years, the world will need millions of tons of new supplies for electric vehicles, renewable energy, and greatly expanded power grids. While investors are increasingly optimistic about the prospects for this kind of demand, supply is facing historic pressure, and a serious shortage of supply may already be imminent.
Citi predicts that demand for copper will exceed supply this year, and there will be a gap of 1 million tons in the next three years, while Morgan Stanley predicts that there will be a 700,000 ton gap in 2024. This has also encouraged copper bulls. They said that copper prices will have to jump higher; only in this way can the construction of new mines be stimulated.
Earlier this week, BlackRock World Mining Trust portfolio manager Olivia Markham said copper would need to reach $12,000 per tonne to stimulate large-scale investment in new mines.
Recently, BHP Billiton proposed a full share purchase offer to Anglo-American Resources and gave a valuation of 31.1 billion pounds (approximately US$38.8 billion). The latter has a large-scale copper mining business in South America. This reflects the current problems facing the mining industry, where many miners would rather buy a competitor than launch a brand new project.
Colin Hamilton, head of global commodity research at BMO, said, “This tells you that it's too expensive to build something new.” Within Japan, Anglo-American Resources declined the takeover offer. One reason was that BHP Billiton's proposal “seriously underestimated” the company and its future prospects.