Copper Gains Encouraged By Growing Apprehensions About Limited Supply

Concerns about bullish demand despite tightening supply conditions—which could result in market deficits—pushed copper prices higher by 0.26% to close at 894.3. Forecasts regarding the metal’s continued usefulness were validated by its essential position in a variety of industries, particularly in electrification for uses including grid-scale energy storage and electric car charging.

Beijing’s move to issue long-maturity bonds, along with China’s continued imports of copper ore despite rising costs, suggested that manufacturers were in high demand and promised further economic momentum.

The lack of material presented difficulties for Chinese smelters, who supply more than half of the world market, affecting their profit margins and driving down output. As big miners have prioritized mergers and acquisitions over starting new ventures because of the high costs associated with new projects, as demonstrated by BHP’s recent proposal to purchase Anglo American, expectations for increased mine supplies remain muted.

The CME Group increased the margin requirements for trading copper futures to $5,000 per contract in response to the skyrocketing prices, indicating the increased market volatility. This action is in response to rumors that major bearish bets on the CME platform, where copper futures have reached record highs, are being covered by commodity dealers Trafigura and IXM, who are reportedly looking for physical copper.

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