Steel hit highs on China's promise to cut production, but metals are benefiting from expectations of a large reopening of developed economies, led by the US, which has announced a major infrastructure plan. For some experts, a super cycle of expansion is expected in raw materials and metals.
The US recovery is accelerating and President Joe Biden's $ 2.25 trillion infrastructure plan will boost sectors such as electric cars and green energy, where certain raw materials will play a key role.
"Most of the copper supercycle is happening right now," explains Max Layton, a commodities analyst at Citigroup. "The bullish outlook is driven by decarbonisation, and I totally agree with that as a catalyst for the next three or four years, but much of this cycle is actually more related to the scale of the global stimulus."
Copper found in almost any manufacturing, from electrical wiring to motors, is fueling expectations of higher profits as nations implement more aggressive climate targets. Goldman Sachs expects that in 2021 it will exceed $ 10,190 and beat $ 15,000 in the next decade.
"Copper could hardly peak and pull back with this bottom market," Harry Jiang of Yonggang Resources tells Bloomberg. The expert notes that an increase in coronavirus cases due to new variants threaten to derail reopening plans in some regions such as India, while investors are concerned about a possible reversal of stimuli in China.
"I disagree on the outlook for copper at $ 15,000," says Xiao Fu, head of commodity strategy at BOCI Global Commodities. "There will be some automatic stabilizers before we get close to those kinds of levels, and there will be adjustment. of the demand ", predicts.
We must also take into account the possibility of greater intervention by the Chinese authorities, which are in favor of stabilizing the prices of raw materials and have already started a series of production restrictions in all industries. Beijing has announced that it will stop approving new aluminum projects as part of the country's green push.
This outlook is boosting steel. China has vowed to cut production, although the measures so far have led to an increase in supply as mills prepare for restrictions. There is also upward pressure from strikes in the ports of Chile. The country is the fourth largest steel producer in the world.
