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Copper and iron ore prices hit record highs amid hopes for global recovery

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·Contributor
·3 min read
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Watch: Copper, Iron Ore Have Further Highs Ahead

Copper (HG=F) and iron ore prices surged to record highs on Friday as hopes of a global economic recovery creates demand for raw materials.

Spot iron ore broke $200 (£143) a tonne for the first time, while copper, which is seen as a bellwether of the health of the global economy, hit more than $10,200 per tonne in London on Friday, rising 1.4% to reach an all-time high of $10,232.

The move pushed Bloomberg’s index of commodities prices to its highest since 2011, and extended a recent rally in the commodity sector. It also helped propel the FTSE 100 (^FTSE) to a pandemic peak.

The rise in copper and iron was also boosted by strong trading data in China overnight. China’s exports surged last month as America’s recovery from the coronavirus pandemic boosted demand.

Exports rose by more than 32% compared with a year earlier to almost $264bn, mostly driven by demand for PPE and other medical related products. Imports also jumped, up 43.1% from a year ago to $221.1bn, accelerating from March’s 38.1% expansion.

The rise in copper and iron was also boosted by strong trading data in China overnight. Photo: Glenn Arcos/AFP via Getty Images
The rise in copper and iron was also boosted by strong trading data in China overnight. Photo: Glenn Arcos/AFP via Getty Images

The benchmark S&P Global Platts IODEX, which tracks the spot price of ‘iron fines’ delivered to China, hit a record high of $202.65 per dry metric ton.

In London, mining giant Anglo American (AAL.L) rose more than 3% on the back of the price spike, while rival BHP Billiton (BHP.L) edged 0.5% higher and Rio Tinto (RIO.L) climbed more than 1%.

Anglo American shares rose on Friday. Chart: Yahoo Finance
Anglo American shares rose on Friday. Chart: Yahoo Finance

In the wider commodity sector, aluminium also extended its gains on Friday, while palm oil touched a 13-year high, and steel hit all-time record levels too.

Neil Wilson at Markets.com said: “There is yet room to run higher in the commodity space.”

Supply issues have also played a role in the recent rally with some copper shutdowns in South America and wild weather in Australia for iron ore. China is currently looking elsewhere for iron ore supply, largely in Africa.

Bloomberg News highlighted that steelmakers have kept output above a billion tons a year despite production curbs aimed at reducing carbon emissions and reining in supply. It added that the measures have lifted steel prices and profitability at mills, allowing firms to better absorb higher iron ore costs.

Read more: European stock markets rise with FTSE 100 hitting new pandemic high

On Thursday, outgoing Glencore (GLEN.L) chief executive Ivan Glasenberg told a Financial Times event that copper would need to jump another 50% for enough supply to come online.

“You will need $15,000 copper to encourage a lot of this more difficult investment,” he said.

"The long-term prospects for metals prices are 'too good' and point to higher prices in the next few years," Commerzbank AG analyst Daniel Briesemann said.

"The decarbonisation trends in many countries — which include switching to electric vehicles and expanding wind and solar power — are likely to generate additional demand for metals."

Watch: When should I start paying into a pension?

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