Copper prices ended the last trading week higher, with three-month contracts on the London Metal Exchange (LME) trading at around $14.23 a tonne on August 21, adding about 1.4% on the day.
The market was supported by a weaker US dollar and statements by the Chinese authorities that they intend to increase the role of budget spending in stimulating domestic demand. China remains the world's largest consumer of copper, so expectations of additional government spending have traditionally supported the industrial metal.
Volatility remained high during the week. On Monday, the price of copper rose to $14,396 a tonne, a six-month high. The increase was primarily due to concerns about the limited supply of available metal outside the US.
However, the situation then stabilized somewhat thanks to the arrival of copper in LME warehouses. The cash copper premium to the three-month contract eased from $436 a tonne on Monday to around $55 by Friday, signaling an easing of supply tensions for immediate delivery.
However, fundamental shortage risks have not entirely disappeared. In mid-August, there was a short-term squeeze on the LME: large long positions became comparable to available exchange inventories, leading to a sharp increase in the price of the metal for near-term delivery. After that, additional copper from the USA and Asia began to arrive at the exchange warehouses.
The additional signal from China remains ambiguous. The Yangshan premium, which reflects demand from Chinese buyers for imported copper, rose about 7% to $93 a tonne by the end of the week. At the same time, copper stocks in the warehouses of the Shanghai Futures Exchange increased by 28% for the week.
In the longer term, the market remains in a pronounced upward trend. Indicative copper quotes as of August 21 were about 47% higher than a year ago.
Demand growth is being supported by the expansion of power grids, data center construction, electric vehicles, solar and wind power, while quickly increasing copper production is difficult due to the long lead times for new fields to start up.
Earlier, the Experts Club information and analysis center published a brief video about the dynamics of world copper production in 1970-2024. According to the given data, Chile remained the largest producer in 2024 with 5.3 million tons, followed by DR Congo with 3.3 million tons and Peru with 2.6 million tons.
Watch Experts Club video on global copper mining - https://youtube.com/shorts/_h8iU50z8C0?si=dDXmg9cHOYbbGUaX
