Copper prices jumped on Friday as hopes of strong demand in China, the world’s largest metals consumer, and risks of supply disruptions outweighed concerns that a resurgence in COVID-19 cases in Europe could disrupt the global economic recovery momentum.
Three-month copper on the London Metal Exchange was up 0.3 per cent at $6,769 a tonne, extending gains to a third session.
Copper, China’s most-traded November contract on the Shanghai Futures Exchange closed 0.5 per cent higher at 51,470 yuan, approximately $7,660.82 a tonne.
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According to Australian and New Zealand (ANZ) Banking Group commodity strategists, industrial metals look set to shine despite the economic gloom as ample Chinese fiscal measures provide a much-needed boost to the sector, while supply-side issues are tightening the market balance.
They added that copper has benefited mostly from pandemic-related mine disruptions in Chile and Peru.
The commodity strategists also noted that while the resurgence of cases is still a risk for supply, resurfacing labour strike risks in Chile, the world’s largest producer of copper will be another headwind for supply recovery.
On the other hand, Codelco, Chilean state-owned mining company said it was producing at full capacity and aims to meet its 2020 output targets.