Traders are taking bets [buying calls] on the London Metal Exchange (LME) that copper prices will hit $12,000 per tonne by December.
Copper prices is gaining altitude, with major exchanges reporting record low inventory levels and coronavirus vaccines expected to pave the way for a swift global economic recovery.
LME that Copper Prices will hit $12,000 per tonne
Comex Copper traded at $4.2160 per pound on Monday – the highest level since August 2011. Prices have more than doubled since the March crash.
A call option gives the holder the right but not obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option gives the right to sell.
The LME three-month copper rose past $9,000 per tonne on Monday to hit the highest level since September 2011. Other industrial metals such as iron ore have also charted a strong rally over the past few months.
Analysts at JPMorgan recently said that commodities might be in the early stage of a multi-year bull cycle.
Commodity dollars such as the AUD and NZD could benefit from a continued rally in copper, iron ore, and other metals, if any.
Shares of copper producers Hindustan Copper, Hindalco and Hindustan Zinc rose up to 18 per cent in an otherwise weak market session on the back of rally in copper prices internationally. Base metals stormed higher on Monday, with copper rallying above $9,000 a ton on bets that increased demand driven by the recovery from the pandemic will spur a historic deficit, putting the economic bellwether on course for a record run of monthly gains. Nickel topped $20,000 a ton.
Copper climbed more than 3% on Monday and is heading for an unprecedented eleventh monthly rise in February. Metals are on tear on expectations that post-crisis demand will outstrip near-term supply. That may both reinforce speculation about about a new commodity supercycle and stoke concern about rising price pressures as the world economy recovers from the pandemic.
The metal’s revival marks a turnaround from earlier in the month, when copper hit turbulence as investors signaled the need for more details about stimulus measures and on concerns about a softening in Chinese demand. But prices rose during China’s Lunar New Year as factory production was more buoyant than usual.