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Copper futures jumped more than 4% in Monday's trading to surpass $11K/ton for the first time, but the rally to record highs may not be sustainable in the coming weeks, as a shipment of material to cover exposed short positions in the U.S. could calm the market.
Benchmark copper futures (HG1:COM) on the London Metal Exchange rocketed to an all-time high of $11,104.50/metric ton, having surged 28% YTD as banks, miners and investment funds have been optimistically touting the metal's long-term prospects, and a flood of investment in recent weeks pressures bearish traders who have taken a more cautious stance due to weak spot demand, particularly in China.
ETFs: (NYSEARCA:CPER), (NYSEARCA:COPX), (OTC:JJCTF)
Potentially relevant stocks include Freeport McMoRan (FCX), Southern Copper (SCCO), BHP (BHP), Rio Tinto (RIO), Vale (VALE), Teck Resources (TECK), Hudbay Minerals (HBM), Ero Copper (ERO), Capstone Copper (OTCPK:CSCCF), First Quantum Minerals (OTCPK:FQVLF), Glencore (OTCPK:GLCNF) (OTCPK:GLNCY), Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY).
The rally went into overdrive last week as a short squeeze on the New York futures market triggered a global rush on the metal, which "has taken prices to another level, and it's very difficult to call a top in this environment," CRU Group principal analyst Craig Lang told Bloomberg. "Commodities markets do tend to overshoot."
But the latest push is "pure speculative rather than real demand," Sucden Financial's Robert Montefusco told Reuters.
At least 100K metric tons of copper are on the way to the U.S. Comex exchange, Reuters reported on Monday, which likely will help allow parties to deliver against bearish positions and take the heat out of the market.