Can copper prices continue to rise in 2021?
Looking ahead to 2021, copper prices are expected to continue to rise as a whole. The core driving logic lies in the fact that the macro-liquidity environment of major overseas countries is still loose, and the overall benefit is non-ferrous metals; although the pace of global economic recovery is different, the tone is upward, and it will form from the physical demand side. Continuous and clear boost. From the perspective of operating rhythm, it is expected that the difference between the supply and demand growth of refined copper will be the largest in the second quarter, that is, the high point of copper prices may be at this stage.
The liquidity of major economies maintains loose: Lido Nonferrous Metals
The sudden epidemic has caused the world to fall into the dilemma of suspension of work and production, economic fundamentals and financial markets have suffered heavy losses, market risk aversion has been stimulated to a high level, and even gold, which is considered a safe-haven asset, has also been sold. The liquidity crisis broke out as a result of the sought-after assets.
In order to hedge against the impact of the epidemic, many countries around the world have launched loose monetary policies to inject sufficient liquidity into the market, and the growth of the money supply of major economies has increased significantly.
But to this day, it can be seen that apart from China’s economy has basically recovered, the epidemics in Europe and the United States are still recurring. For the current countries in Europe and the United States, considering that the impact of the epidemic is diminishing, the easing is not as strong as in the first half of the year, but the epidemic has not improved. Under the circumstances, loose monetary and fiscal policies still have to be maintained.
On August 28, the Federal Reserve announced the assessment results of its monetary policy framework. The framework did not change its monetary policy to target full employment and long-term inflation of 2%. In terms of current inflation and employment data, the core PCE in October was 1.4%, which is still far behind the Fed’s 2% target.
The unemployment rate has continued to fall to 6.9% since April, reflecting that the job market is in a repair channel, but the new non-agricultural employment data has fallen since June, and the number of permanent unemployment has gradually higher than temporary unemployment, indicating that the labor market has insufficient momentum. For the United States, a loose monetary environment is particularly necessary.
On December 10, the European Central Bank decided to increase its loose monetary policy, emphasizing that uncertainty remains high in the short term, and it will continue to maintain favorable financing conditions to maintain medium-term inflation stability.
At present, inflation in the Eurozone is at a very low level, only -0.3%; GDP growth in the third quarter was -4.3% year-on-year, which is not as good as the level before the epidemic. In order to boost economic growth confidence and inflation, Europe will maintain loose monetary policies and may continue to increase.
In 2009, the European Union and the United States simultaneously increased their monetary policies and maintained their loose monetary policies. Copper prices went out of a bull market. Based on the aforementioned judgments on European and American monetary policies, the loose monetary policy in 2021 will still "care" the global liquidity of funds, and the rise in copper prices is expected .
In addition, because the Federal Reserve maintains a low interest rate for a long time, it will damage the credit base of the U.S. dollar, which will further drag down the U.S. dollar index. Based on the negative correlation between the US dollar index and copper metal, the sluggish US dollar index has weakened the pressure on copper prices.