RIO DE JANEIRO, BRAZIL – The shortage of copper in the warehouses of global distribution centers intensifies, leading the metal price to continue to rise.
Inventories on the London Metal Exchange that are not yet destined for withdrawal are near their lowest level since the 1970s. For reference, available stocks have fallen by almost 90% in the face of a steady flow of orders to withdraw metal from European warehouses this month.
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In addition, record spot premiums are not translating into increased supplies in warehouses.
The future price of the metal is trading on the Chicago Stock Exchange with an increase of 1.2% to US$ 4.78 per pound.
Meanwhile, on the London Metal Exchange, Chile’s main export product rose 1.45% to US$ 4.83 per pound and is just one step away from its maximum value, which reached US$ 4.86 per pound last May.
“The sudden contraction that emerged in the LME is an extreme example of the supply shortages emerging in commodity markets as rising energy costs jeopardize production and Covid-19 tangles global supply chains,” Bloomberg argued.
“This is an extreme situation,” Oliver Nugent, a metals analyst at Citigroup Inc., told Bloomberg by phone from London.
Chile and Peru, the world’s No. 1 and No. 2 copper producers, are benefiting from this move, which both can use well in the post-pandemic economic recovery.