Copper, often seen as a true indicator of global economic health due to its variety of end uses, shot up in value post-election on proposed US infrastructure spending and sound economic data out of China.
The price of contracts for copper delivered in three months’ time has risen from US$2.14 a pound on Comex a year ago to $2.5135/lb, according to Bloomberg, with a gain of more than 20% since the start of September.
Bloomberg columnist David Fickling said “there’s a funny thing” about the recent surge in copper prices, arguing a supply crunch rather than a demand surge was a better explanation for the rise.
He said it would pay to keep an eye on top-five copper producer, the Democratic Republic of the Congo, which was entering a political crisis as president Joseph Kabila refused to step down.
“The risk for the copper market is that the tensions return the country’s metal output to the levels of the early 2000s, when the deadliest conflict since World War II left production at less than 10% of its current level,” Fickling said.
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