Copper Prices hit a multi-year high this week on the back of breakout demand from China, partially related to a crunch in imports in the secondary market. Metals are now leading many broader economic indicators in the midst of the global recovery, and a lagging rebound of production on the supply-side could boost copper even higher in coming weeks. A continually weakening dollar, as well as popularity among fund managers are also bullish signals.
Related ETFs: iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC), Global X Copper Miners ETF (COPX)
Chinese Demand Driven Higher by Dramatic Drop in Scrap
Copper cleared the pivotal US$3 per lb. level on Monday, shooting up as high as $3.065 ($6757 per tonne) on the Comex, as the recovery in the Chinese economy, the world’s top consumer of the metal, gains momentum.
Reuters reports that funds were net long of the CME contract to the tune of 60,974 contracts in the week to Aug. 18, according to the latest Commitments of Traders Report from the U.S. Commodity Futures Trading Commission (CFTC).
China’s refined copper imports hit 554,979 tonnes in July, spiking 89.9% YoY and 14.2% month on month, data released by the General Administration of Customs on Aug. 31 showed.
On the Shanghai Futures Exchange, the bellwether metal racked up its fifth straight month of gains in August, which is the longest winning streak since 2009. The Autumn months are usually the country’s slack buying season for copper, but the current momentum is likely to keep activity from slowing at the typical rates.
In light of increasing demand, the lack of available scrap in the country is becoming a serious issue. Chinese solid waste laws dampened copper scrap importers interests, causing worries about future copper scrap supply, China Construction Bank said in its August copper report, noting that…
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