Copper prices crossed the key $8,000 a tonne barrier yesterday, leading other metals to their highest levels in 20 months amid signs that demand, already strong in China and the rest of Asia, is improving now in the US, Europe and Japan.
Mining executives and some analysts and traders say the surge in copper and other metals reflects re-stocking in developed countries, after companies ran down their inventories to critically low levels last year during the crisis.
“We believe that the world ex-China has already started on a dramatic restocking programme,” said Julien Garran, a commodities analyst at UBS in London. He estimates the re-stocking could add 25-50 per cent extra demand until July.
Copper prices at the London Metal Exchange yesterday rose to $8,009.75 a tonne, the highest level since August 2008 and up 90 per cent over the last year.
The red metal is known as “Dr Copper”, as if it possessed a degree in economics, because many believe its price swings anticipate shifts in global manufacturing activity. Copper has only traded above the $8,000 a tonne level during phases of strong economic activity, including the first half of 2008 and brief periods in 2006 and 2007. It hit an-all time high of $8,940 a tonne in July 2008.
The broader LME index, which tracks the cost of aluminium, zinc, lead, nickel and tin as well as the red metal, jumped to its highest in more than 20 months. Other commodities were also higher on the day, with oil briefly trading at $87 a barrel.
But some analysts cautioned that investors' flows on the back of positive economic news, rather than actual consumption were driving metals and other commodities prices, suggesting that the raw materials market was vulnerable to a correction.
Copper, aluminium and lead yesterday hit their highest levels in more than a year, boosted by a combination of strong investor flows, a weaker US dollar and signs of strong economi
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