LONDON: Copper and iron ore prices hit record highs Friday as demand for the key commodities surges on the back of a powerful recovery in the global economy.
At the same time, stock markets and the dollar traded mixed ahead of a keenly awaited US jobs report, reports AFP.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, broke to an all-time high above $10,300 per tonne 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.
Commerzbank AG analyst Daniel Briesemann said “long-term prospects for metals prices... point to higher prices”.
He added: “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 $200 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.
Eyes are now on the release of US jobs figures later in the day, which will be the latest indicator of the state of the world’s top economy. They come a day after a forecast-beating reading on unemployment benefits that showed claims fell to their lowest since the coronavirus struck last year, and two days on from news that 742,000 new jobs were created in the private sector in April.
“With jobless claims hitting a pandemic-era low, anticipation for the full jobs picture... mounts,” said Mike Loewengart, of E*Trade Financial.
The reading “is another proof point that we’re one step closer to full economic recovery. As we see some serious momentum building on the jobs front, all eyes will be on how this plays into action taken by the Fed.”