Copper, iron ore hit records as demand surges

[LONDON] Copper and iron ore prices hit record highs on Friday as demand for the key commodities surges on the back of a powerful recovery in the global economy, though Asian equity markets struggled to maintain an early rally ahead of a keenly awaited US jobs report.

With major economies led by the United States and China reopening after last year's shutdowns, industries are ramping up production, pushing the cost of materials ever higher as traders also worry about a lack of supply caused by the pandemic.

Copper, a major indicator of the state of the global economy owing to its use in a multitude of products, finally broke to an all-time high above US$10,200 per tonne on Friday, and with the global recovery expected to continue for some time, analysts say the price can continue north.

"It's hard to foresee copper prices turning around amid the current bullish atmosphere," Ji Xianfei, at Guotai Junan Futures Co, said.

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

"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." Iron ore also broke to new levels above US$200 a tonne as commodities prices across the board advance, with lumber, tin, bacon and sugar all sharply higher.

"The global economic recovery is lifting steel demand with China's steelmakers keeping elevated levels of output, despite production curbs aimed at reducing carbon emissions and reining in supply," said National Australia Bank's Rodrigo Catril.

However, that has fanned fears about a spike in inflation around the world that many warn could force central banks to wind back their ultra-loose monetary policies that have helped fire a global markets rally for more than a year.

Top bankers led by the Federal Reserve have repeatedly pledged to maintain their accommodative measures for the foreseeable future, though many believe their hand could be forced by a period of excessively high inflation.

REUTERS