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Chinese buyers will have to face high copper prices, reaching record in LME

By Mai Nguyen

HANOI (Reuters) – Copper prices are breaking historic records on the London Metal Exchange, above $ 10,000, and large Chinese importers who have been pausing their purchases in anticipation of a better scenario are now facing a situation of costs “higher for longer” of the metal.

Prices in London hit a record high of $ 10,398 a ton on Friday, soaring more than 3% on the day, accumulating a rise of more than 32% for the year.

Shanghai’s most active copper contract, with June delivery, touched 74,950 yuan per ton ($ 11,600.91), just 1.6% below its all-time high of 76,160 yuan.

Some Chinese buyers, including wire and wire suppliers to State Grid of China, a large copper consumer, have postponed purchases because they cannot pass the entire cost increase to the state-owned company, which is constrained by a fixed budget. .

However, State Grid in particular may have to grit its teeth and pay before the end of June as it is under pressure to complete network expansions before the hotter summer months force a halt to redevelopments, while the energy demand overloads the grid.

“They (the State Grid) have to (adapt). Otherwise, how will they be able to achieve their 2021 goals?” Said CRU copper analyst He Tianyu, referring to the state company’s fixed expansion target.

He added that China’s State Reserve Bureau will be reluctant to sell part of the stocks, as copper is considered “more precious” than other metals such as aluminum, especially with the copper concentrate market, which has tight supplies.

Copper has benefited from widespread stimulus programs driven by infrastructure, tight supply of concentrate, recovery in global demand for goods, and hopes for strong consumption of the industrial metal in the renewable energy sectors.

“Momentum remains fierce, and there is strong fundamentals behind this rally with a tight supply line and strong demand that will continue thanks to green technologies,” said Commodity Broker Anna Stablum of Marex Spectron.

At the same time, a possible tax hike in Chile, the world’s leading producer, could curb investment in copper production, eventually damaging supply.

(Reporting by Mai Nguyen. Edited in Spanish by Marion Giraldo)

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