Copper rally pauses as Goldman forecasts record highs

LONDON: Copper paused near 10-year highs on Wednesday ahead of a policy announcement by the U.S. Federal Reserve, but analysts at Goldman Sachs joined others predicting a rally to record levels.

Benchmark copper on the London Metal Exchange (LME) was up 0.3 per cent at $9,884.50 a tonne at 1637 GMT after reaching $9,965 on Tuesday, the highest since 2011.

Prices have more than doubled since March 2020 as the world economy rebounds and the shift to greener, more copper-intensive energy raises the prospect of supply shortages.

“It is only a question of time before it exceeds the psychologically important $10,000 mark,” said Commerzbank analyst Daniel Briesemann, adding that the all-time high of $10,190 would be likely be breached shortly afterwards.

But he said the rally looked overstretched and a sharp correction was likely before copper rises further in the years ahead.

GOLDMAN: Goldman Sachs forecast copper would average $9,675 a tonne in 2021, $11,875 a tonne in 2022 and $12,000 a tonne in 2023.

CHILE: The threat of strikes at copper mines in Chile receded after the country allowed another drawdown in pensions, pleasing workers.

SUPPLY OUTLOOK: Ample supplies next year and in 2023 will keep the market balanced, but miners need to start investing in new capacity now to meet a pickup in demand growth.

TIN: LME tin was up 4.6 per cent at $28,400 a tonne after reaching $28,595, its highest since 2011. Supplies are short, with stockpiles in LME-registered warehouses at just 1,300 tonnes and the price of quickly deliverable metal shooting above the benchmark contract.

MARKETS/FED: World shares were near record highs and the dollar and global bond yields nudged higher. Markets will be watching for signs that the Fed will tighten policy in a statement due at 1800 GMT.

NICKEL
: The nickel market should see a small surplus this year, the International Nickel Study Group said on Wednesday.

OTHER METALS: Aluminium was up 0.3 per cent at $2,402.50 a tonne, zinc rose 0.2 per cent to $2,930.50, nickel added 2.6 per cent to $17,400 and lead was 0.1 per cent higher at $2,092.

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