The rally in the copper price won’t last

Copper has bounced by 10% to $7,300 a tonne after falling to a near-two-year low last summer. But don’t expect this to last. The latest uptick was based on supply disruptions at smelters and a surprisingly sharp drop in stockpiles amid healthy demand in China, which accounts for 40% of total demand.

But there is less to China’s appetite for the red metal than meets the eye, as Capital Economics points out.

Not all the copper was used to build infrastructure. Some was used to build up long-term inventories, while some copper purchases took place as part of financing [...]

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