Copper prices continued to soar on Monday, reaching the highest levels since August of 2011 and nearing the record highs from earlier the same year. Copper is often used as a gauge for global economic health, giving rise to its moniker ‘Dr. Copper’. The industrial metal has been lifted by hopes of a global economic rebound from the COVID-19 pandemic and by recent fears over supply disruption in Chile.
The latest round of fiscal stimulus in the United States, along with vaccine rollouts across the world have stoked optimism. Earlier this month, the International Monetary Fund (IMF) said it expects the world economy to grow by 6% in 2021, up from its 5.5% forecast in January. IMF chief economist Gita Gopinath struck an upbeat tone in the latest World Economic Outlook report, stating: “Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible.”
Green Energy Push
Copper has benefited from US President Joe Biden’s $2.25 trillion infrastructure plan, which includes $174 billion in spending to support the electric vehicle (EV) market and shift away from gasoline fueled cars. Biden would like to boost the production and sale of zero-emission buses and cars and increase EV charging stations. Copper is used in electric vehicles and renewable energy systems.
Meanwhile, fears over a copper supply disruption has emerged as port workers in Chile called for a strike over pension savings withdrawal issues. Mining unions have also threatened to protest if the government does not allow further early withdrawal of pension savings. Chile accounts for roughly a quarter of the world’s copper supply.
Virus Related Risks Remain
A rise in coronavirus cases and new variants could keep a lid on copper prices. The virus continues to rage in countries such as India, which recorded over 320,000 new cases on Tuesday. According to the latest data from John Hopkins University, global deaths from COVID-19 have now exceeded 3 million.
Copper Related Stocks
Shares of copper mining companies rallied on Monday, with Anglo-Australian multinational Glencore (GLNCY) gaining 3.3% and Phoenix, Arizona based Freeport-McMoRan (FCX) up by 6.6%.