China’s Gradual Re-Opening Has Put Copper in a Bull Market
On June 4, 2020, copper entered a bull market spurred by robust demand from China and hedge funds “closing bearish bets” according a report from Neil Hume at Financial Times.
Copper is used in almost all construction projects and white goods and is a large source of earnings for miners across the globe.
It was up over 20 percent from its March low by the evening of June 4, when it went over $5,330 a ton. Based on these prices, copper is now in its bull market phase.
“Economic data is signaling a robust recovery in the Chinese construction and manufacturing sectors during the second quarter,” declared Robert Edwards, principal analyst at consultancy CRU.
Half the world’s copper output is consumed in China. Chinese demand for copper has increased significantly since Beijing started relaxing its lockdown in March.
Supply dislocations have continued to rise as the Wuhan virus rocked South America, which is home to prominent copper mines. In Peru, mined copper production dropped by 33 percent in a year timespan on April to 1.5 million tons, according to the country’s Ministry of Mines and Energy.
Despite the chaotic nature of the Wuhan virus, China appears to be slowly bouncing back. The East Asian country is no joke and is a formidable adversary to the U.S. due its authoritarian ethos and expansionist agenda.
Once America is re-opened, it must go back to basics when it comes to dealing with China and developing rational strategies to contain Chinese influence.