Copper prices jump past $9,000 in the international market for the first time in almost 10 years on the expectation of an increase in demand for the metal. London copper crossed the $9,000 a tonne level after climbing as much as 3.1% to $9,187 a tonne on Monday for the first time since September 2011, extending its rally.
Last week, it posted its third straight weekly gain.
The contract is now 10% away from the all-time high of $10,190 a tonne touched in February 2011.
The rally in copper prices has been driven mainly by an expectation of a pick-up in demand after the Chinese New Year, bets of an economic recovery and worldwide push for cleaner, greener energy. A weaker dollar is also supporting copper prices as the greenback-priced LME metals appear cheaper to holders of other currencies, increasing demand.
Copper demand is expected to rise as top consumer China returned from a long holiday. Goldman Sachs recently warned of a historic shortage with "the market now on the cusp of the tightest phase in what we expect to be the largest deficit in a decade" as Chinese buying "triggers the next leg higher."
"China's return from the LNY holiday has heralded a burst of onshore investor copper buying after the holiday season with limited inventory builds evident so far," said a note from the international brokerage adding that prices are likely to hit near a record sooner rather than later.
"We continue to forecast the largest deficit in 10 years in 2021 (327kt), followed by an open-ended phase of deficits as peak copper supply (2023/24) and a record 10-year supply gap on the horizon," the note said further. Goldman Sachs has also raised its 3-month target on copper to $9,200 a tonne (from $8,500), 6-month target rose to $9,800 (from $9,000) and 12-month target to $10,500 (from $10,000).
As per the brokerage's target, copper will hit a new all-time high in a year's time.
Citigroup expects copper prices to touch $10,000-12,000 a tonne given the huge demand-supply gap globally.