Copper prices climbed last week, due in part to a rally in oil.
According a report from the Wall Street Journal, copper for May delivery was up 1.3% to $2.2575 a pound on the Comex division of the New York Mercantile Exchange. This upward move comes with a steep rise in oil prices, which were boosted by declining product stockpiles and signs of rampant supply.
Reuters recently reported that last month, China’s copper imports surged 50% year-over-year in February while raw material copper ore imports nearly doubled year-over-year during that same time period. Chinese smelters increased orders for imports of copper concentrates in November and December 2015, with shipments arriving in Q1 2016.
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So what is causing this splurge in copper imports? Has the economy turned a corner and this is the beginning of a rally in demand and prices?
“We would urge a little caution, copper imports appear to be the product of differentials between domestic and global market prices prompting investors to take positions. Concentrate imports are more a response to higher treatment charges encouraging Chinese smelters to suck in metal while the going was good. Sales of finished product such as bar and wire are no higher today than they were at the start of the year, Reuters reports, suggesting this is more speculative and financial than demand-driven,” wrote our own Stuart Burns.
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