Positive manufacturing data from China, the advancement of vaccines against COVID-19 and the expected smooth transfer of power in the US are likely to keep copper prices up in H1 2021, according to Chilean Copper Commission (Cochilco). Spot copper prices rose by 6.2pc to $338.5/lb on last Friday from a week ago. The average price of copper for 2020 stood at $273.6/lb.

 

Growth in Chinese manufacturing in November indicates an expected rise in demand for the red metal in China which could absorb the drop in the US and Europe due to the second wave of the COVID-19, stated Cochilco’s report on Friday. 

 

United States

Following the nomination of Janet Yellen (former chair of the Federal Reserve) as Secretary of the Treasury by the President-elect Joe Biden, the US admin is expected to maintain low-interest rates for a longer period and expanded government spending. The US dollar is also expected to weaken, which could boost commodity trade in dollars, according to Cochilco. 

 

Investor behaviour

The positive data on Chinese growth, a sharp rise in copper imports reflecting low inventories at the metal exchanges, the advancement of vaccine development against the pandemic and the expected smooth transfer of power in the US is likely to keep copper prices in the upper bracket for the first half of 2021. 

 

The report suggested that speculative operations of the stock market are increasing the price of copper. Due to less buying and more sale of the futures contracts made by investment funds and speculative trading LME copper rose by 11.6pc in November and was up by 17.6pc in October. 

 

Refined copper inventories

Refined copper inventories registered a decrease of 10,429mt or 3.18pc from the prior week. The inventories at London Stock Exchanges and Shanghai Futures reported a drop of 4.2pc and 4pc, respectively. 

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