Copper prices have roughly doubled from where they were a year ago as global industrial activity recovers, supply remains tight and markets expect a series of stimulus measures to boost consumption. The violent rise after the Spring Festival has dumbfounded the market.
A broker accumulated a long position in copper contracts worth $1 billion in just four days, according to the Shanghai Futures Exchange. The broker increased its copper long position by more than 800 per cent, making it the largest long holder of SHFE copper contracts in May, June and July. It added 19774 copper contracts to its copper position from April to July, equivalent to 6.7 billion yuan ($1.04 billion), based on the closing price of SHFE's most active April contract on Thursday.
Some analysts pointed out that the recent rise in copper prices, low inventories, strong interest from institutional investors and periodic industrial recovery are the three main factors driving its purchases. The broker's clients are mainly in three areas: industrial customers, including downstream manufacturers and consumers, institutional investors and speculators.
Some analysts also pointed out that copper prices are expected to continue to strengthen and raise expectations for the 2021 LME copper ceiling from $9000 to $10000 a tonne, with speculative inflows likely to exacerbate price volatility. Other market participants believe that whether it is inflation, carbon-neutral emissions or electric vehicles, there are different angles of development momentum, so this has become a hot topic and a good story for copper.
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