Copper price is on a consolidation pattern after hitting a 10-year high on Thursday last week. At the time of writing, copper futures were down by 0.08% at 4.5255. The red metal remains on an uptrend amid the ongoing talk of a commodity supercycle. The recovery of various economies, coupled with move to a green economy have fuelled the metal’s demand.
Commodity Supercycle
The talk of a commodity supercycle has been on since the beginning of the year. After the coronavirus pandemic hit the world in 2020, analysts and investors alike saw 2021 as the year that economies would recover and push the demand for various commodities to new heights. While some analysts consider the current situation to be a mere bull market as opposed to a supercycle, one thing is undeniable – commodity prices are at record highs.
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Copper is one of the commodities that have seen its prices surge significantly in the recent past. Last week, copper futures at COMEX hit a 10-year high at $4.550 per pound ($10,008 per tonne).
Decarbonization-Driven Demand
The rallying of copper price has largely been fuelled by the ongoing transition to green economies. Various parts of the world, from China to the US and Europe have enacted stringent emission rules that will facilitate decarbonization in the short and long-term. The increasing acceptance and demand for electric vehicles and the involved infrastructure has led to the bulls gaining control over the copper market.
Economic Recovery
Copper price is further finding support in the steady recovery of economies. The red metal is largely used in construction, industrial, and electrical projects. China and US are among the countries that have recorded strong economic data. in addition to other economic numbers, the manufacturing data from both countries have highlighted the sector’s expansion.
Last week, China’s manufacturing PMI was at 51.1. While it missed the estimates of 51.7, a number above 50 still signals expansion. Yesterday, the US ISM manufacturing PMI came in at 60.7 compared to March’s 64.7 and the forecasted 65.0. The US factory orders data will further impact copper price.
