The price of copper has touched $2,675 per pound this week, the highest since January 27, when it reached $2,677 per pound. However, it has subsequently deflated.
The second quarter of the year has been profitable for copper. The metal saw a sharp decline in March after the coronavirus outbreak in Europe.
The price of the metal has risen nearly 31% since it hit its lowest level of the year on March 19, at $2,024 per pound.
According to analysts, the recovery in the price of copper is due, above all, to the gradual return to activity and liquidity interventions by the US Federal Reserve.
The industrial slowdown caused by COVID-19 generated many problems for copper producers and nervousness among investors.
That sentiment has been replaced by greater optimism among buyers of the metal.
Copper reached the highest prices of the year during January, reaching $2,878 on January 16.
In the following months, copper experienced a 30% drop between the maximum in January and the minimum price registered in March.
The copper market has gained confidence
Despite the expectation that the metal will return to its January values, the situation seems uncertain. Analysts think it is necessary to follow the evolution in the price of this metal, the development of the health crisis, and tariff disputes between the United States and China, the world’s largest copper consumer.
The copper market is fearing an increase in the number of coronavirus infections. This could bring instability in the metal prices again.
Chile, Peru, China, and the United States are the four largest producers of the commodity globally. Copper is a fundamental material in energy transmission as it is an efficient electrical conductor. This metal is used, for example, in means of transport, such as automobiles or aeroplanes, in the manufacture of electronic equipment, such as computers, and in the construction of machinery.
Timothy Wood-Dow, an analyst at BMO, stated that confidence in the copper market has improved. It’s visible in imports and declining stocks.
However, for the prices to increase, there’s a need for competition for copper units. That would come from a recovery in the West.
China’s imports of crude copper totalled 436,030 tonnes in May. This figure was 5.5% less than that of April. Still, it is a 20.8% increase compared to the same month in 2019.