The economy affected by the Corona epidemic is now slowly gaining momentum and China is making aggressive purchases. Copper stock is limited all over the world and its demand is continuously increasing. For all these reasons, its prices are continuously climbing upwards. Expert says that when it comes to the copper outlook, now the current level seems to be increasing faster. In such a situation, a profitable opportunity is being created for investors. Copper prices are considered as an economic barometer and indicate economic activity.
On the commodity exchange, the price of copper with expiry on March 31, 2021 on MCX is being Rs 731.80. The way the price is being seen in its price, in a few days, copper can show a level of Rs 760-780. Copper being expensive will affect the common people as it is used as a raw material in electronic products. In such a situation, people may have to spend more to buy electronics products when copper is expensive. Apart from this, the speed of trains can also be seen.
China’s aggressive buying increased prices
China has a big role in increasing the price of copper. According to Anuj Gupta, Vice President (Commodities and Research), Angel Broking, China is not only aggressively buying agri commodities but also buying base metals aggressively. Before the worldwide lockdown was imposed in the first quarter of 2020, prices started falling as its demand from its main consumer China and other countries fell by 15 per cent. However, in July 2020, China started buying and on an annual basis 38 percent more imports of copper were imported.
Solar energy and EV increase the demand for copper
Electronic vehicles are currently being promoted as an alternative to fossil fuels all over the world. Many countries around the world have set a timeline for this that all the vehicles have to be electrified by that time. Electric vehicles use about four times more copper than petrol and diesel vehicles. In addition, solar and wind energy are being emphasized as an alternative source of energy worldwide. For this, the use of copper in preparing the infrastructure is increasing. Due to all these reasons, consumption of copper has increased and its prices are getting stronger.
The situation changed due to corona
Last year, the Corona epidemic caused a worldwide lockdown. Due to this, all economic activities were badly affected. According to Gupta, after the process of unlocking started, the business started gradually and the demand for copper from factories increased. Apart from this, the corona cases are increasing in some places, so its stocking has also started. Due to Corona, many people have started giving priority to private vehicles instead of public transport, so the demand for vehicles is increasing. In such a situation, consumption of copper will increase but according to the demand, it is not produced.
Copper is strengthened by increased spending on infrastructure
Governments around the world are increasing spending to salvage the economy affected by the Corona epidemic. Spending on infrastructure is being increased. This will not only give a boost to the economy but will also help in solving the employment problem. However, this will also accelerate the consumption of copper and its price will be strengthened.
Excess consumption of copper production
According to the report of the International Copper Study Group (ICSG), in November 2020 last year, refined copper had fallen by 77 thousand tonnes, while in October 2020, there was a decline of 1.45 lakh tonnes. There was shortage of 5.89 lakh tonnes of copper in January to November 2020, compared to 4.27 lakh tonnes in January to November 2019 last year. According to the monthly bulletin report of ICSG, the global refined copper output was 21.2 lakh tonnes in November 2020 while the consumption was 22 lakh tonnes. Apart from this, the global stock of refined copper stood at 12.65 lakh tonnes at the end of November, while it stood at 13.29 lakh tonnes at the end of October. According to the International Copper Study Group, there may be a 4.5 percent increase in copper mine production in 2021, but a reduction in supply according to demand cannot be expected to bring down the price of copper.