Copper prices soared to a 10-year high this week, as an industrial rebound from the Covid-19 pandemic, coupled with the Biden administration’s latest infrastructure spending announcements, fuel expectations of higher demand for the metal.
Following some instability in March amid renewed concerns over lockdowns across Europe and a strengthening US dollar, copper has once again regained its bullish trajectory. The metal has risen 11% since the beginning of April, to above $10,100 per tonne— the highest since the 2011 commodity boom. Indeed, the latest copper rally comes as reflation signals flash red, further threatening to send the metal skyrocketing even higher.
The latest plans of an infrastructure overhaul in the US has fuelled speculation in support of copper prices. The Biden administration’s “Build Back Better” plan promises to allocate hundreds of billions of dollars towards renewable energy technology — in which copper plays a significant role given its conductivity characteristics.
On top of that, the pandemic-induced shift to remote work, as well as a broader movement towards a digital economy, have caused demand for electronics to soar, further supporting the copper rally. “Technology, semiconductors, data centers, and cellular towers all require significant copper usage,” Bank Wealth Management senior investment strategist Rob Haworth told MarketWatch.
At the same time, investments in copper supply have been drying up over the past several years, leaving manufacturers competing for scarce copper resources and thus driving prices even higher.
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