Energy Crisis Originating with Coal and Gas Looms Over to Copper
Copper prices are record high likely to make ripple effects in technology and renewable energy sector
Supply shortage led price surge in commodities now eyes on copper. Price of copper in London Metal Exchange (LME) tracked biggest weekly gain in five years amid supply concerns.
Three-month copper extended gain crossing $10,000 a tonne, the highest level since June 11. It gained 7.1% on weekly basis marking the strongest weekly rise since November 2016.
Inventories tracked by London Metal Exchange warehouses saw the biggest drop of 89% since 1974 amid surging demand for the metal as economic activities globally recovers.
Tracking supply shortage cash copper saw a $147 a tonne premium over the three-month contract which is the highest level since April 2012.
Traders sees copper as an informal gauge for global economy growth. However, this time around strong demand not being supported by adequate supply capacity poses worries to global macroeconomic outlook. Citigroup estimates the world to see a 521,000 metric tonne of deficit this year.
Just as economies globally adopts “living with COVID” policy commodity shortages originating with coal and natural gas shortages in Europe slowly looming over the entire commodity catalog jeopardizing strong growth trajectory.
The soaring price would add ripple effect in renewable developments efforts. Renewable energy industry is highly dependent on copper from production of electric cars, wind turbines and solar panels.
Oil is expected to gear for another round of bullish gain above $80 next week amid sizeable supply shortages.