Copper Prices Hit Record High... Will the Raw Material Rally Continue? (Comprehensive)

Price Rises to $10,232 per Ton... Up 133% Compared to Last March
Raw Material Supply Shortages Expected, Prices Likely to Increase Further

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] Copper prices have reached an all-time high. With a global economic rebound expected after COVID-19, attention is focused on whether a commodity price rally will begin, starting with copper.

According to Bloomberg News, as of the 6th (local time), copper prices on the London Metal Exchange (LME) rose to $10,232 per ton, surpassing the previous record high of $10,190 in February 2011. Prices have increased about 31% this year alone and surged 133% compared to March last year.

As a major economic recovery is anticipated in key countries such as the United States and the United Kingdom following the COVID-19 pandemic, there are expectations that explosive growth in economic demand will continue to drive a rally in commodity prices. The record-high copper price is also interpreted as being closely related to this trend. Analyst Ji Shanpei stated, "In the current atmosphere, copper prices do not seem likely to decline again," adding, "Inflation caused by economic recovery will drive commodity prices upward."

In particular, as global eco-friendly policy trends are expected to expand, the price of copper, a key raw material for green technologies, is likely to show a long-term upward trend.

Accordingly, the market is raising its copper price forecasts. Trafigura, a major oil brokerage firm and a key player in global commodity trading, predicted that copper prices could rise to as high as $15,000 per ton within the next 10 years.

Not only copper but various other key raw materials such as iron ore are also showing price increases. On the same day, LME tin prices reached $30,125, recovering above $30,000 for the first time in 10 years since 2011.

Experts are concerned that commodity supply will not keep pace with the rapidly increasing demand, potentially causing supply shortages within this year. Bank of America forecasted that copper demand will increase by about 6% this year, and as a result, copper supply will become insufficient starting this year.

Additionally, investment in copper mines this year is expected to slightly increase to $16.2 billion compared to $15.2 billion last year, raising the possibility of continued supply bottlenecks. Goldman Sachs diagnosed, "The current copper supply chain is completely unprepared for the upcoming surge in demand."