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The most-traded February copper contract on the SHFE stood at 54,210 yuan ($8,234) per tonne as of 10.09am Shanghai time, up 530 yuan from the previous session’s close.
The red metal’s price reached as high as 54,640 yuan per tonne, hitting its highest level since November 27.
Market sentiment has improved amid the recent rally in the copper price and long-term supply concerns as well as positive macro-economic data, and open interest increased 2,280 to 182,744 positions.
“The [copper price] rose strongly, adding to gains seen over the past week as sentiment continues to improve,” ANZ Research noted.
“Long-term supply concerns are driving tightening market conditions for copper as continued demand from power and construction are boosted by electro mobility,” analyst from SP Angel said.
On the demand side, pressure is being added by the looming ramp-up in copper demand driven by rising electric vehicle (EV) production.
“[The Clean Energy Ministerial] EV30@30 campaign has set the ambitious goal of a 30% market share for electric vehicles, significantly boosting demand for energy capture, storage and delivery infrastructure and associated raw materials,” SP Angel noted.
In a scenario where 100% of the world’s vehicles are electric, copper demand would be expected to increase 21% compared with current global demand, according to a report released by UBS in May. The report also expects the EV market to account for 13.7% of global car sales by 2025.
Positive US and Chinese data further strengthened market sentiment.
Overnight, US existing homes sales came at 5.81 million, beating both expected and previous readings.
“In China, a People’s Bank of China survey showed the fourth quarter economy confidence index rose to 79.1%. This follows other macro data that paints a positive picture for base metals demand,” ANZ Research said on Wednesday.
China’s Central Economic Work Conference to be held from next Monday will provide insights into the country’s economic agenda for next year. The conference will focus on ways to strengthen national supply-side reforms.
Copper stocks on the London Metal Exchange dipped 575 tonnes to 201,150 tonnes.
Tin and nickel track copper higher; aluminium, zinc, lead under pressure
Currency moves and data releases