Breaching the US9000/tonne benchmark, LME copper price skyrocketed to the highest level since 2011. The recent rally in copper price has been driven by hopes of stronger demand as global economic recovery accelerates and concerns over supply tightness in the metal. While the demand/supply looks positive for the metal in the longer term, recent strength appears overextended. As suggested in the CFTC commitment of traders report, net long positions of copper futures rose to 73 909 contracts in the week ended February 16, slightly below the record high of 80 039 contracts in December 2020. The elevated net longs suggest that profit-taking, thus price correction, is imminent.

Thanks to lockdown measures and vaccination, the global increase in the coronavirus cases has peaked in mid-January. Many countries, such as the UK, have rolled out plans to relax pandemic-related restriction measures. The market is hopeful that global economic activities would accelerate and return to pre-crisis level later this year. This should drive copper demand higher. For instance, Bank of America projects that global copper consumption would jump +6% this year, while Citigroup estimates that the market to see deficit in 2H21.