Home Forex News Copper Price At 2-Month Highs On Improving Factory Activity

Copper Price At 2-Month Highs On Improving Factory Activity

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  • Increasing Copper Demand
  • Improving Chinese Factory Activity
  • BAC Copper Outlook

Copper prices continue to edge after registering a second consecutive month of price gains in May. The rally has come at the backdrop of improving industrial activity around following the easing of lockdown restrictions triggered by the COVID-19 Pandemic.

Copper Prices Spike

A spike in china’s factory activity is one of the factors that offer support to copper prices that are already flirting with two-month highs. Copper stocks have more than doubled to 255,725 tons from January levels alluding to strong demand in the market.

Copper prices at the London Metal Exchange closed at highs of $5,332.25 per ton in  Friday trading session after plunging to lows of $4,615 .50 a  ton at the peak of the COVID-19 in March. An uptick in industrial activity should continue to offer support for prices given the broad array of uses for the red metal.

Copper Outlook

Analysts at Bank of America have already bolstered the forecasts for copper prices, affirming they expect prices to rise by 5.4% to highs of $5,621 per ton. The analysts have also retained their projection for 2021, whereby they expect prices to surge to highs of 6,250.

However, copper prices face a wave of challenges going forward. Simmering tensions between the U.S and China is a major tailwind that could affect demand, consequently, curtail further price gains. In addition, copper consumption could contract by as much as 18% before the end of the year should global GDP continue to contract and drop by 4.2% by year-end.

A fall in copper purchase is the biggest threat to copper prices when the global economy appears to be plunging into recession. For now, an uptick in industrial activity as COVID-19 fears ease away should continue to offer support as a bounce back from five-year lows continues to gather steam.

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