Industrial metals prices have continued to rise, with LME copper trading at more than $8,500 a tonne, the highest level since April 2012. Copper prices have risen more than 90 per cent since bottoming out in March last year.

Copper is popularly known as "Dr. Copper" because of its close relationship with the economic cycle, and most industry analysts expect further price increases as global demand recovers and supply struggles to keep up, copper prices will "take off" , so it could be a hot 2021.

Goldman has raised its 12-month target price to $10,500 a tonne in response to a warning of a shortage and a huge supply gap in the copper market as global markets tighten.

On the one hand, the economic fundamentals continue to improve and the supply and demand of refined copper are good. On the demand side, the demand base under the impact of the epidemic in the first half of 2020 is low, and China, Europe and the United States are the top three economies in terms of consumption of refined copper, the economic recovery will lead to an acceleration in demand.

Unlike in the United States and Europe, China has largely contained the spread of the epidemic in recent months after the economic shutdown caused by the new outbreak earlier this year, allowing business and tourism to resume in the near term, boosting economic growth, stimulated demand for copper and other industrial metals.

On the other hand, the prospect of increased investment in infrastructure, particularly in communications, is expected to continue to drive demand for copper in the 2021, while major mining countries are facing the full impact of the epidemic, the shortfall in capacity has been exacerbated by the persistent difficulty of returning to pre-epidemic peak rates of mining facility starts, and as a result, LME copper prices could rise by at least another 10 per cent 2021.

Moreover, global inventories are still at multi-year lows and falling, providing strong support for copper prices. At the same time, the beginning of the third quarter of the power grid and Power Investment Growth will continue to increase in order to complete the annual investment plan.

The recent rebound in the property sales index will also lead to an increase in the demand for home appliances in the coming months. The production and sales data of the auto industry have increased for several consecutive months. We are optimistic that there is room for an increase in consumption in the future. After the traditional off-season, demand is expected to keep up. 

Source: Huitong