President Trump boosts the case for Copper bulls

By Giles Coghlan, Chief Currency Analyst at HYCM

Copper Futures contracts rose early yesterday am on the report that President Trump’s administration is preparing a $1 trillion infrastructure boost to the US economy. The money is to be put aside for traditional infrastructures like roads and bridges as well as some being kept for 5G wireless infrastructure and more technological needs.

Will Copper prices exceed $6000?

If the US delivers on this large package this could well be the catalyst needed to take copper prices above $6000. As economies continue to gain pace around the world demand for copper is going to pick up in tandem. In fact, Goldman Sachs has recently raised their 3,6, and 12 month forecasts to $6000,$6250, and $6500 respectively.

Are Supply levels a concern?

Furthermore, to support the Copper bulls case, on top of anticipated rising demand there are some growing supply concerns too. China is expected to produce 75000 tons less this year because of COVID-19. Also, on the other side of the world in Chile, some unions are calling for a reduction in output as some workers fall ill with COVID-19.

COVID-19 push and pull

Yesterday’s news that a relatively low-cost steroid is an effective treatment for COVID-19 is the first really good news there has been concerning treating the virus. It is called dexamethasone. The risk of death is cut by 1/3 for those on a ventilator and 1/5 for those on oxygen. It means that we are finally able to preserve life with relatively cheap medicine. The medium-term impact is that this news should be supportive of risk on tones, but remember second wave virus fears have re-emerged and that is weighing on risk in the short term.

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