Codelco Chuquicamata Copper Smelter
Copper prices (HG1:COM) closed +1% to $6,594/ton, pushing near two-year highs reached earlier this month, as London Metal Exchange inventories fell to the lowest in 14 years and China enjoys its strongest copper demand in three and a half years.
"There is more bullishness about the state of the global economy" and inflation likely will rise, says WisdomTree analyst Nitesh Shah, who also believes prices will increase further.
Copper inventories in LME-registered warehouses at more than 92K metric tons are the lowest since 2006 and down from more than 280K tons in May.
Also, protests at Freeport McMoRan's (NYSE:FCX) Grasberg mine in Indonesia, the world's second largest copper mine, continued for a third day, disrupting operations.
Citi analysts say China's 8.6% Y/Y copper demand growth in July was the highest since February 2017 and has broadened beyond the construction sector that initially led the rebound.
Citi recently forecast copper will hit $6,800/ton in the next three months, citing likely progress on coronavirus treatments, U.S. policy easing and sustained strength in China's economy.