The copper market is experiencing a wave of investor interest that has not been seen for a decade. A flood of investors'dollars this week lifted copper, the industrial metal bellwether, to a seven-year high of $7,520 a tonne. But traders recalled the last time copper prices broke through the $10,000-a-tonne Bull Market in 2011, as the prospect of a global economic rebound spurred inflation fears, governments have poured money into metal-intensive "green" stimulus packages, so they are braced for further upward movement.

"We are in an unprecedented position because there is more money sitting around looking for work than ever before, " said Hanson, of london-based Metals trading firm Concord Resources Ltd. . "Copper has the potential for green applications since the demand-driven bull market of 10 years ago, " the chief executive said

It's a remarkable transformation. Like almost all commodities, the copper market has been in a slump for much of the past decade. Prices have fallen more than 50 per cent from their all-time highs in 2011, falling below $5,000 a tonne in 2015-16 and 2020. Mining stocks also fell sharply. Specialist commodity-focused Hedge funds such as Astenbeck Capital Management LLC and Clefs Capital LLP have largely disappeared or been reduced to a fraction of their original size.

But now commodities are being favoured by expectations of a global rebound, a weaker dollar and rising inflation. The Bloomberg Physical Index of commodities has risen 43 percent since March. "given the unprecedented growth in monetary and fiscal policy we are seeing, we expect inflation to exceed current market expectations, " said Evy Hambro, global head of thematic and Industry Investment at Blackrock Inc. in London, "historically, commodities and mining-related stocks have been an effective way to offset rising inflation expectations. "

This is true of all commodities, but copper is benefiting from more specific factors that make it a favorite among long-term investors. While many expect oil prices to rebound in the short term as the world begins to return to normalcy, doubts about its long-term prospects are growing as the pace of energy transformation accelerates. Copper, on the other hand, is likely to benefit from this transition because of its use in wires.

Goldman Sachs Group Inc. this month predicted a new "structural bull market" in commodities, arguing that stimulus programs like China's new five-year plan, europe's green deal and president-elect Biden's plan for the US package could have an impact similar to that of China's infrastructure in the 2000s. "The world is redesigning transport, power generation, information storage and commodity distribution, " says copper market veteran David Lilley, in London, he boasted that his new metals-focused Hedge Fund, Drakewood Capital Management, had been amply rewarded since its launch in May. "governments around the world are supporting and encouraging this transition, and the impact on metal demand is exciting, " he said. There are also short-term factors that make copper an attractive investment. Unlike oil, copper supply is already tight, as demand is less affected by the new crown disease and China has stepped up purchases as prices have fallen.

Imports of refined copper and its products are up 41 per cent this year, up 1.6 m tonnes, more than Germany's annual demand. The supply of copper was also reduced by the outbreak of the new crown disease. Increasingly, however, traders see investment as the main driver of prices. Bullish bets on copper are the highest since 2014, according to Citigroup Inc. . That could mean the end of this investment philosophy. Indeed, its analysts point to copper's outperformance over non-exchange-traded metals such as manganese and Molybdenum as evidence that prices are investor-driven. 'with physical indicators outside China still generally weak and the world showing no signs of deficits, we can say that, ' Citigroup analyst Max Leiden said in a report last week, the increase in positions pushed up the price. That does not mean, however, that new investment flows will not push prices higher. With central banks responding to the new coronavirus outbreak by unleashing an unprecedented wave of liquidity into global markets, historical fundamentals to push prices may not matter so much. 

Source: Changjiang non-ferrous metal net