Hot Products: Iron ore rises 10%, copper record | Business and Economic News

Iron ore futures rose more than 10% and copper extended its record among bets that it will be one of the biggest winners in product growth that raises concerns about inflation around the world.

While analysts tried to determine the driving force behind the gains in iron ore on Monday, they cited several trends, including optimism that central banks will maintain solidarity policies as the global economy recovers. China has raised expectations that environmental regulations will tighten on the copper bull – considered key to the green energy transition – and has encouraged speculation that steelmakers could pre-load iron ore purchases before starting new bullfights.

The gains add up to a one-year rise in commodity prices that has turned into an excessive transformation in recent weeks, as the Bloomberg Commodity Spot Index has risen to its highest level in nearly 15 decades in 14 days.

The “Goldilocks scenario” is emerging as global growth is boosted with reduced wage pressures and a hairy Federal Reserve, Goldman Sachs Group Inc. commodity analysts said in a May 7 report that weak U.S. job numbers added to the stimulus for more cases on the same day. The risk of the bulls – and anyone who bets on a good return on stocks and bonds – is that the rise in commodities is reaching broader inflationary measures and will eventually force central banks to tighten.

With regard to copper, long-term forecasts are being strengthened due to likely demand, as governments are focusing on large investments in renewables and electric vehicle infrastructure. While the recent copper march in 2011 spurred China’s economic boom, analysts expect this rally to see a much broader rise in metal use.

“We’re in a new world,” Jeffrey Currie, head of raw materials research at Goldman Sachs, said in an interview with Bloomberg TV. “We are seeing much more balanced growth between the US, Europe and China.”

The iron ore sector is “very, very hot,” Vivek Dhar, a commodity analyst at the Commonwealth Bank of Australia, said in an interview with Bloomberg Television. “The offer is not yet able to meet that strong demand.”

The future of Singapore’s iron ore hit a record $ 226 a tonne. Dalian contracts increased the daily limit when the market opened.

Copper, seen as a barometer of the health of the world economy, rose to 3.2% to $ 10,747.50 per tonne on the London Metal Exchange before easing profits. It traded at $ 10,446 at 15:24 in London. Aluminum slipped 1% after rising 2.5%.

“There’s still a lot of room,” said Evy Hambro, of BlackRock Inc. general heads of the company’s thematic investments at Bloomberg Television. “What we’re really doing is testing the high levels of the commodity markets to find out what the new price range will be.”

There were new concerns on the supply side, as China’s large copper smelters promised to reduce purchases of mined concentrate this year because the country wants to reduce carbon emissions. This may ease tensions in the supply of mine, but founders will need to encourage scrap purchases to prevent a decline in refined metal production.

“It is noteworthy that foundries do not imply a cut in production,” analysts Susan Bates and Marius van Straaten said in an email to Morgan Stanley analysts. “They seem comfortable that they can make up for the reduction in concentrated purchases by using copper in other ways.”

The rise in iron ore occurs when Chinese steelmakers maintain production rates of more than 1 trillion tons per year, despite numerous production constraints aimed at reducing carbon emissions and restoring supply. These measures have boosted steel prices and profitability in mills, allowing them to better adapt to higher iron ore costs and potential forward loads before further environmental reductions.

The rest of the world’s steelmakers, such as ArcelorMittal SA, are also experiencing growth, as demand bounces from a minimal pandemic.

“There is a chance that demand from the former China will return again, as we will see a further increase in demand for steel globally and we will see demand for iron ore remain at these high levels,” said Char’s Dhar.

Traders will look closely at how China responds. Shipbuilders and manufacturers of domestic products will eventually be unable to afford high steel prices, the country’s state-run Xinhua news agency reported on Sunday, citing analyzes by the Chinese Iron and Steel Association. The report said the steel would continue to face difficulties.

The government has scheduled national inspections of steel capacity reductions, and the National Development and Reform Commission has asked the active state regulator and provincial working groups to conduct self-checks by May 15. Authorities will conduct local inspections in June and July. , according to a statement issued Monday.

–With the help of James Thornhill, Winnie Zhu and Yvonne Yue Li.