Copper volatility to persist amid market surplus

Significance

The market reacted as vaccine roll-outs accelerated around the world and various stimulus measures were enacted, including spending on copper-heavy green initiatives. The price surpassed USD10,000 per tonne in May 2021 and again in October. Stockpiles on the London, Comex and Shanghai exchanges fell to their lowest levels since 2008.

Impacts

• If completed, DP World’s deepwater seaport development in the Democratic Republic of the Congo will provide another copper export route.
• Chile’s copper mining tax burden could reach 70%, one of the world’s heaviest, if a royalty bill is adopted in its current form.
• Global price pressures may attract investors searching for an inflation hedge, but higher US rates would offset the metal’s attractiveness.