LONDON (Reuters) – “Have metal markets forgotten about corona?” The question, posed by analysts at Commerzbank in the title of a May 28 research note, captures the latent optimism the worst of COVID-19 may be over for industrial metals such as copper.
The current London Metal Exchange (LME) copper price of $5,360 per tonne may be down by 13% on the start of January but it has also staged a significant recovery from its March low of $4,371.
The focus is on recovering activity in China rather than downturn in the rest of the world. Beijing’s stimulus package, centred on “new” infrastructure such as electric vehicle charging points, should be positive for copper demand.
China’s continued strong imports and relatively flat global exchange stocks reinforce the positive optics. But, Commerzbank warns, “this optimism is premature in our opinion as we believe that the worst is yet to come.”
The bank is not alone in this view. The International Wrought Copper Council (IWCC) is expecting a surplus of almost one million tonnes of metal this year and next.