Copper is a precious metal eyed by investors, which had an exceptional year in 2020. As a matter of fact, its value rose 60% between March and December of this year.
A few reasons explain this new trend: China started trading copper at the Shanghai International Energy Exchange (INE) under international renminbi-denominated futures contracts. Also, copper is a major element in the fight against COVID-19, whether in medical treatment products as well as in the vaccine formulation.
In addition, the arrival of 5G in many countries including China is currently generating a gigantic demand. China is currently the world’s biggest user.
Dr Copper Reaches New Highs
“Dr Copper” seems to have a bright future ahead of him. French media Capital reported in October, that its growth was unprecedented.
“Considered a barometer of global economic activity because it is widely used in industry, ‘Doctor Copper’ suffered from disruptions in supply chains due to Covid19, before taking full advantage of the solid recovery in China”, the newspaper noted.
French blog Boursorama confirmed, adding that the red metal benefited from the recovery of the Asian giant because the country is the world’s largest consumer.
“The price of copper has jumped 37% since the beginning of the year to 3.5 dollars an ounce, its highest level since early February 2013”.
The vaccine, a red metal booster
While the coronavirus has been weighing a heavy impact on financial markets, it seems that the surge in copper confirms the predictions of some investors: precious metals are back. The red metal is one of the major components of the vaccine.
Ouest-France journalists already noticed back in April the need to use copper to cure the coronavirus, with some hospitals reducing infection rates by 40% thanks to the precious metal.
A prediction that has been confirmed over time judging the latest prices, “copper on January 8 broke a new record since early 2013 at 8,238.00 dollars per tonne on the London Metal Exchange (LME),” noted Antenna, a media specialized in precious metals.
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5G Is Thirsty for more
If the red metal is traditionally used in the transportation industry, 2020 has also proven its virtues for the medical industry and new technologies such as helping develop 5G bandwidth.
Last July, China’s copper imports posted a new record of 762,210 tonnes. In October 2020, the country had already imported more copper than it had in 2019, according to Swiss site Invest. Metal is also key in making electric vehicles.
By 2030 more than 250,000 tonnes of #copper will be used per year as part of the windings in electric traction motors in on-road electric vehicles.
Source: International Copper Association research#Copper #royalty #generator pic.twitter.com/YHXuLhMgHJ
— Mundoro Capital Inc (@MundoroCapital) January 4, 2021
While China’s economy appears to be recovering from the pandemic, it is very likely that copper demand will not increase further in the coming months.
The above content is considered to be market commentary information and shall not be perceived as independent investment research or investment advice.