Copper has had a phenomenal series of rallies that led to the breaking above the 7-year highs. The price of copper is trading above USD 7,700 per ton and, according to some forecasts, there is a chance of continuing increases in the next two years, which could lead to new historic highs. Goldman Sachs alone expects the copper price to rise to around $ 9,500 per ton. At present, we are mainly observing a very clear rebound in imports from China. Despite a very difficult year related to the coronavirus, China imported more copper in the first three quarters of this year than in the past year. In addition, very low inventories levels, including copper scrap, forced China to buy more expensive products.
Of course, some believe that with such high prices, a large amount of inventory, mainly scrap may be directed to the market to take advantage of the high prices. This was the case in 2011 after the price exceeded USD 10,000 per ton. Now inventories levels, both on all world exchanges and in China (based on data from exchanges) are at the lowest levels since 2014.
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It is worth paying attention to the copper- gold ratio. One can see that in recent years support occured around 3.0 level. If we were to count on a similar rebound as it was after the previous financial crisis, the ratio could increase to 6.0 level. Assuming that monetary conditions will continue to support gold - we assume that the price will rise up to $ 2,000 (as you can see the yields at the moment also offer a chance for even higher gold prices), a ratio of 6 would give $ 12,000 per ton for copper! Of course, such a situation is possible with strong fiscal support in China and around the world.

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