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Copper hits record above $11,000 on bets that shortage looms

Copper hits record above $11,000 on bets that shortage looms
The copper smelter at Glencore’s Mopani Mines in Mufulira, Zambia. (Photo: Per-Anders Pettersson / Getty Images)

Copper surged to a fresh record, extending a months-long rally that’s been driven by financial investors who have piled into the market in anticipation of supply shortages.

Futures on the London Metal Exchange jumped as much as 4.1% to $11,104.50 a ton, exceeding the previous record set in March 2022. The global copper world is being roiled by a massive squeeze in the New York market, where prices set an all-time high last week.

The short squeeze drove prices on the Comex exchange to an unprecedented premium over the LME and has triggered a rush to reroute metal supplies to the US.

Read More: Copper Short Squeeze in New York Is Rocking Metals Markets 

“The Comex short squeeze is rediverting copper to the US and tightening supplies in other regions,” Gong Ming, an analyst with Jinrui Futures Co., said by phone. “The Chinese market is expected to see inventory withdrawal soon with exports rising.”

A chorus of investors, traders and mining executives have been warning about a looming deficit over several years, saying that could push prices sharply higher. Demand for the metal has been surging due to its role in the energy transition, while new mine supply looks limited. 

Copper has risen by more than a quarter since the start of this year. A sudden tightening in ore supply raised the prospect that the global market may face the long-promised shortfall earlier than expected if smelters responded by reducing output of refined metal.

A series of setbacks at major mines in recent months prompted a wave of buying by investors, even as many participants in the physical trade have warned that the market was running ahead of reality. Demand remains relatively tepid — especially in top buyer China, where inventory levels remain high.

Read more: The Copper Market Grapples With a Crucial Question

However, the supply disruptions and sustained price rally have emboldened copper bulls while drawing financial investors into the market in a bet on further gains. Copper was 3.5% higher to $11,040 a ton at 10:23 a.m. Shanghai time.

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