The price of copper traded in the United States has soared to an all-time high. This is due to the visible increase in copper demand following the recovery of the manufacturing industry, along with speculative funds pouring in.
According to the New York Mercantile Exchange on the 16th (local time), the 3-month copper futures price exceeded $11,000 per ton on the 15th. This is the highest price ever recorded. Copper prices, which have been on the rise since the beginning of the year, surged by 11% just last week.
The recent rise in copper prices is interpreted as a result of a sharp increase in demand due to the global economic recovery. Competition among companies to build artificial intelligence (AI) data centers has emphasized the use of copper in wiring. There are also reports that Chinese authorities are considering measures to have local governments purchase unsold housing units.
Meanwhile, logistics issues caused by transportation restrictions at the Panama Canal and the aftermath of the Baltimore bridge collapse in the U.S. last March are making copper supply in the U.S. difficult.
Asset management firms and hedge funds are also fueling the price increase by using commodities like copper as a hedge against inflation.
Meanwhile, major foreign media reported that U.S. copper prices are significantly higher than the global benchmark copper prices in the United Kingdom.
Recently, the copper futures price in New York has been more than $1,000 higher compared to the London copper futures price. This contrasts with the usual difference of less than $90. This is due to traders who bet on a decline in U.S. copper prices (short selling) unexpectedly seeing prices rise and rushing to buy copper (short covering), which further pushed prices up.
Eleni Joanides, Copper Research Director at consulting firm Wood Mackenzie, said, "The market seems to be running wild," adding, "Huge speculative funds have entered long positions over the past few months."
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