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Copper Prices Poised for Best Week Since 1980

November 11, 2016 at 16:20 by Andrew Moran

Copper prices are set for their best week in more than 30 years. Traders are speculating that there will be greater global consumption of the industrial metal in the years to come. This sentiment is fueling the surge in copper prices.

December copper futures climbed 3.7% to $2.6525 per pound at 14:45 GMT on Friday on the New York Mercantile Exchange. Copper prices have not traded this high since June 2015. Moreover, Copper prices are on track for a 16.2% weekly gain, which is the biggest weekly advance since 1980.

After the surprise Donald Trump victory on Tuesday, investors are betting that the president-elect will move ahead with his 10-year $1 trillion infrastructure spending initiative. Trump has said that he wants to fix the inner cities and rebuild roads, highways, and bridges, which will likely require deficit financing.

Ultimately, this is helping the red metal and other industrial metals to rally this week.

In addition to Trump’s infrastructure projects, there are two other factors helping the metal: copper supplies and nations’ demand.

The copper market has made gains from reports of declining warehouse stocks and recent production outages that helped lift prices. With positive economic data, China is moving ahead with infrastructure projects. It is in the middle of a three-year $720 billion transport build-out program, and it just approved $12.6 billion in additional funding for three new railway projects. Other nations are looking to boost their economies through infrastructure spending. This year, for example, Canadian Prime Minister Justin Trudeau announced a $125 billion infrastructure program.

The big news for copper is that it will not have to only rely on China for gains. For the past 10 years, the copper market has depended on Beijing for consumption of the industrial metal. The world’s second-largest economy represents roughly half of the metal’s global consumption.

Despite these encouraging signals, experts warn that copper prices could face a correction in the coming months due to investor sentiment or profit-taking.

For the time being, it appears that economists will need to revise their copper demand forecasts.

The world’s largest copper producers are Chile, China, Peru, the US, and the Congo.

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