Copper prices started the week by leaping on US President Donald Trump’s optimism on reaching a final trade deal with China.
Copper prices started the week with a leap and bound on the back of optimism from US President Donald Trump regarding reaching a final trade deal with China.
The red metal saw its highest price since early July when benchmark prices peaked on the London Metal Exchange (LME) at US$6,540 per metric tonne, though they simmered to US$6,480 by close. This comes after copper broke through the US$6,000-per-tonne mark in late January amid a weaker dollar and strengthening sentiment towards the Chinese economy.
On Monday (February 25), President Trump released a series of tweets explaining that the US wouldn’t add further tariffs to Chinese imports at the beginning of March, saying trade talks between the two countries had made “substantial progress.”
“For copper, it’s the hopes about easing trade tensions between the US and China, and we saw further evidence over the weekend that this is happening,” said Julius Baer commodities research analyst Carsten Menke.
According to FocusEconomics’ most recent report, copper is anticipated to continue making gradual growth through the year with the base metal expected to grow 5 percent to US$6,501 by Q4 2019. Meanwhile, that number is predicted to climb 10.2 percent to US$6,824 by Q4 2020.
The report goes on to say that this year’s copper prices are likely to be boosted by headwinds to supply, highlighting major miner Freeport-McMoRan (NYSE:FCX) as a prime example. The company stated in a January press release that production from its Indonesian operations was expected to be “significantly lower” in 2019 and 2020 as mining transitions from the open pit to underground.
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Securities Disclosure: I, Olivia Da Silva, currently hold no direct investment interest in any company mentioned in this article.