The global copper market could be on the cusp of a historic supply squeeze as Chinese demand runs red hot and exchange inventories plunge to their lowest levels in more than a decade.
A growing chorus of traders and analysts say those dwindling spot reserves could trigger a further surge in prices, building on a rally that lifted copper this week to two-year highs above $6,800 a ton. Red Kite Capital Management fund manager George Daniel said the market is starting to resemble that of the early 2000s, when a similar Chinese buying spree emptied the world’s warehouses of copper and sent prices vaulting to record highs. The 24 million ton-per-year copper market has experienced bouts of tightness ever since the early days of China’s industrial expansion, but that country’s rampant appetite after emerging from coronavirus lockdown could usher in a period of chronic undersupply. “This time it’s been different because China has been sucking everything up,” Daniel said in London. “It feels like we’re getting into a period where there’s just no copper around.”