Investing.com– Copper prices surged to record highs in Asian trade on Monday, extending a recent rally as a short squeeze on the Comex exchange and extended bets on tighter markets this year sparked increased buying in the red metal.
on the London Metal Exchange rose 0.8% to a record high of $10,848.50 a ton, while jumped 0.9% to $5.1370 a pound and were in sight of record highs.
The red metal has been on a tear in recent weeks amid growing optimism over lower interest rates this year, as well as stimulus measures in top importer China. Bets on tighter supplies- amid refiner cuts in China and stricter sanctions on Russian metal exports- also fueled buying into copper.
But the biggest boost to the red metal was a short squeeze on the Comex Exchange last week, where heavy buying of long-term copper contracts boosted prices and rattled short positions on the red metal. U.S. copper futures in particular shot up last week on the squeeze, while traders were also seen racing to procure copper supplies for delivery on the July contract.
Long positions on copper were fueled by expectations that reduced mining output will be unable to keep up with copper demand in the coming years, especially amid a global push into green energy and electrification.
Stimulus measures in China, which is the world’s biggest copper importer, also boosted bullish bets. The country drastically loosened restrictions on its property market to help boost the sector, and also began a massive 1 trillion yuan ($138 billion) bond issuance last week.