Chinese companies at various stages of the copper industry chain, from importers to producers, have seen prices soar due to growing demand.
"The copper price has been rising in recent months, and it hit a record high of 79,000 yuan ($12,332) per ton in May, compared with about 35,000 yuan in March of 2020," a sales manager surnamed Si from Shandong Huaqiang Cable, a supplier for State Grid, told the Global Times on Tuesday.
Prices of iron ore, copper, corn and other bulk commodities have been volatile around the world.
On Monday, The benchmark copper on the London Metal Exchange (LME) was up 0.6 percent to $9,939 a ton at 1600 GMT, (Tuesday 12 am Beijing time) according Reuters. The price of copper, which is widely used in the power and construction industries, is down 8 percent since touching a record high of $10,747.50 a ton this month.
"The price surge is generally due to declining inventories and rising demand," Huang Wei, metal chief analyst of Hicend Futures Co told the Global Times on Tuesday.
China is the world's biggest copper consumer, and 80 percent of China's copper relies on imports - mainly from Peru and Chile. "The pandemic has cast a shadow on copper production," Huang said.
A coming election also poses uncertainties for copper production for Peru, the No.2 supplier of copper. "Presidential candidate Keiko Fujimori would support energy and mining projects if elected," her adviser said, "drawing a stark contrast with her left-wing rival," according to Bloomberg.
Huang said that copper demand in industries such as new-energy vehicles, and storage and transmission of photovoltaic power are "huge," and this is also one of the reasons behind the rising demand in China.
China's manufacturing activity in March stayed in expansion territory and grew 15.2 percent year-on-year, National Bureau of Statistics data showed, and some copper-intensive sectors such as autos also expanded.
Arrivals of unwrought copper and products totaled 484,890 tons in April, a decline from 552,317 tons in March, the General Administration of Customs said, but imports in April were still 5.1 percent higher than the same period in 2020. China's March copper imports rose 25 percent from a year earlier.
In China, rising copper prices are causing pain for downstream industries.
A staff member surnamed Tao from Firmer Co, a bathroom accessory company in Yiwu, East China's Zhejiang Province, told the Global Times that costs have increased 35 percent due to the rising cooper price, as 70 percent of their products need to use copper.
"Although we can use other materials such as stainless steel, core parts still need copper," Tao said, and rising copper prices are also squeezing their profits.
China's top economic planner announced on Tuesday an action plan for strengthening price mechanism reform during the 14th Five-Year Plan (2021-25), highlighting the need to respond appropriately to price fluctuations.
Chinese officials vowed to further crack down on what they call excessive speculation in the commodity markets, leading to the sharp losses of industrial commodities on Monday both in China and abroad.