Signal 1: The global mining market is picking up
Copper prices are often seen as a barometer of the global economy and a bellwether for the global mining market.
China's rebounding economic growth and signs of progress in developing a COVID-19 vaccine have boosted the outlook for demand for industrial metals.
Ole Hansen, head of commodities strategy at Saxo Bank, told Reuters that industrial metals had generally been strong this week and that the vaccine news had boosted hopes for an economic recovery outside China, where demand was already strong.
"The positive metal news is brewing and copper prices are gaining momentum," Peter Mooses, senior market strategist at RJO Futures, told Bloomberg.
Base metal prices have been driven by positive economic recovery news, and vaccines are the biggest positive and a long-term solution to fears of further disruption to the global recovery."
Goldman sachs also expressed optimism about mineral commodities such as copper, which it said remained its "favorite" commodity on the basis of cyclical and structural support and ongoing supply problems.
It maintained its 2021 "overweight" recommendation on commodities, citing the sector as likely to be the best hedge against inflation and set for another bull market.
Goldman also said base metals were more likely to rise in the short term than oil because of recovering demand from China.
As things stand, the global mining market is picking up sharply, with prices of iron, copper, aluminum, nickel, zinc and other metals already exceeding their pre-epidemic levels.
It is expected that once the vaccine is widely rolled out, the global mining market will be very promising.
Signal 2: Copper supply shortages could worsen
A report released by the World Bureau of Metals Statistics showed a shortage of 447,000 tons of copper in the january-August period, compared with a shortage of 383,000 tons for the whole of last year.
Copper is one of the minerals with the most obvious separation between supply and demand. Although the demand is mainly in China, 6 of the world's top 10 copper producers are distributed in Peru and Chile. South America is the world's largest copper supply base, but copper production in South America is facing severe challenges, which is very worrying.
In Chile, the world's largest copper producer, Cochilco was reported to be concerned that production would face serious challenges if new projects and mine expansion plans did not go ahead as planned.
"Chile now has enough projects to increase annual copper production to more than 6 million tons and even to 7 million tons," said Jorge Cantallopts, director of research and public policy at the Chilean Copper Commission.
That's the potential. The question is how to get there.
Cantaloputz believes that Chile should create conditions to accelerate the project, promote the sustainable development of copper mining industry, and extend the industrial chain.
Chile's copper commission expects copper production to fall by no more than 100,000 tons.
"If there is a second wave, that will change.
It depends on when and on how large a scale the vaccine works."
"Added Cantalopz.
Uncertainty over Chile's constitution also casts a pall over the project's future development, as investors will be cautious and not rush ahead until a new constitution is in place.
Peru, the world's second-largest copper producer, has fared even worse than Chile.
The biggest protests in decades and political turmoil in The capital, Lima, have pushed Peru's currency to record lows.
Experts also warned that further unrest could threaten efforts to combat the epidemic in Peru, which has one of the highest per capita coVID-19 mortality rates in the world.
Bmo Capital Markets said in a report that if the unrest escalated in Peru, it could cause problems for the logistics of copper concentrate (and other metals).
"As the number of new cases increases, we have to expect further restrictions to come soon," Edward Meir, an analyst at ED&F Man Capital, told Bloomberg.
The spread of the disease could exacerbate this supply premium by raising fears that mining activity will be halted again."
While progress has been made with coVID-19 vaccines, the number of coVID-19 infections continues to surge globally, particularly in South America, where the situation remains dire.
On the whole, in the short and medium term, the shortage of international copper supply may intensify, and the continuous recovery of demand will give copper prices a strong support.
PUDA copper packing machine:
PUDA has sold many ton bag copper concentrate packing machine to other countries, like Southern Copper Corp. Rio Tinto Group, Zijin Group, LG China, OT Group, FL Smith, MCC,KAZ Minerals PLC and E.Mix and ECUACORRIENTE S.A.
