China Has Copper Flying Like a FANG Stock
Green prospects are likely to keep supporting the red metal, even after post-pandemic stimulus fades.
Copper is defying gravity on the back of China’s economic comeback.
Photographer: Qilai Shen/BloombergCopper has touched $7,000 per metric ton on the London Metal Exchange, having climbed roughly 60% from a late-March nadir. The industrial metal is trading at levels unseen since 2018 despite a surge in coronavirus infections in Europe and beyond, stockpiles rising off recent lows, and expectations of a surplus in 2021. The reason is China, which is dominating the 24-million-ton per year market like never before thanks to a recovery that is outpacing other economies.
The metal’s rebound from four-year lows in March mirrors the rally in that other gravity-defying asset class, the FANG-powered U.S. stock market. Copper’s rally has exceeded expectations, given that the most pessimistic forecasts for pandemic-related supply disruptions haven’t been borne out. Peru’s production fell in August from a month earlier, hit by worker shortages, but output in Chile, the world’s top exporter, increased. BHP Group-operated Escondida, the Chilean copper mine that’s the world’s largest, avoided a strike last week, even if workers at Lundin Mining Corp.’s far smaller Candelaria downed tools in the country.