MARKET COMMENTARY
May started with a rally in base metals due to rising hopes for global economic recovery, strong demand and weak dollar. LME copper, which was closed on the first trading day of the week, renewed its 10-year record in the first week of the month.
It were were effective in the sharp rise that producers stated that higher prices are needed for new investments, otherwise there will be a copper shortage in the coming years. On the other hand, copper production decreased in Chile for the 10th consecutive month.
LME copper hit an all-time record as high as $10,747.50 on May 10, after which it fell on profit-taking sales and expectation of a decline in demand in China.
At the same time, prices were supported by the threat of strikes in Chile and expectations that China will compensate for weak factory data. LME copper was on the rise again after a union representing workers at BHB's Escondida and Spence mines in Chile rejected a contract offer from the company and the threat of a strike, but failed to break the record again.
The news that China is planning to strengthen the management of both the supply and demand side in order to reduce the "irrational" increases in commodity prices was most important factor that stopped the price rise. It has been reported that China will impose serious sanctions on those who monopolize, stockpile and speculate among companies in the commodity markets.
Also, U.S. President Joe Biden delivered the first full budget proposal detailing its goals to expand the size and scope of the federal government by spending more than 6 trillion dollars in the coming fiscal year.
The dollar fell to a nine-week low after the Fed continued its pro-monetary policy easing and the White House's large-scale spending plans. End of month LME copper supported by the loss in the dolar, the workers' strike in Chile and the optimism of Biden's budget plan and ended May with %4.75 gain and $10,275 level.