Copper price surges as China's reopening lifts demand hopes

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Comex copper +5.2% to $4.556/lb (HG1:COM) in Thursday's trading, as China's strict COVID-19 lockdowns appear to be on the wane and China's cabinet announced a package of fiscal, financial, investment and industrial policies to revive its pandemic-ravaged economy.

Freeport McMoRan (NYSE:FCX) +6.3% to its highest since mid-April, while other producers also are rallying, including (HBM) +8.6%, (TECK) +7.1% and (SCCO) +3.8%.

ETFs: (NYSEARCA:COPX), (CPER), (JJC), (JJCTF)

On the supply side, Chile - which accounts for more than 25% of the world's mined copper - reported a nearly 10% Y/Y decline in production in April, with output at state-owned Codelco down 6% to 116K metric tons and Collahuasi's production plunging 26.5%.

Chile's environmental regulator initiated a sanction process against Antofagasta's (OTC:ANFGF) Los Pelambres copper mine for deficiencies associated with tailings management.

Also, production in neighboring Peru - the world's no. 2 copper producer - has been disrupted by increasingly violent community protests against mining.

Two fires broke out at two key copper projects this week, hitting MMG's Las Bambas copper mine and Southern Copper's planned Los Chancas project, during local protests.

Globally, mining companies have been posting underwhelming production reports, weighed by operational challenges including COVID absenteeism and extreme weather, and costs are climbing as Russia's war in Ukraine and Chinese lockdowns exacerbate supply chain disruptions.

But RBC Capital analysts said this week that they expect global copper supply will outpace demand over the next two years.