KOBE, Japan (Reuters) - Rio Tinto is “cautiously optimistic” about the current copper market that has spiked in recent weeks, a senior executive at the world’s second-largest miner said on Monday.
However, Rio holds a stronger outlook for the mid- and long-term copper market, he said.
Copper prices have surged more than 20 percent this month, led by stronger economic indicators out of the world’s biggest consumer China and expectations that the election of Donald Trump as U.S. president would boost metals markets through increased infrastructure spending.
Three-month copper on the London Metal Exchange briefly hit $6,025.50 a ton on Friday, its highest level since June 2015, though it pared some of the gains on Monday.
“Copper prices have rallied due to a combination of different things,” Arnaud Soirat, Rio’s chief executive for copper and diamonds, told Reuters on the sideline of “Copper 2016” industry conference being held in Kobe, Japan.
“People thought demand was higher than they had anticipated, with the Chinese economy showing some good signs of healthy demand,” he said, adding that expectations for the positive effect from the U.S. presidential election also lent support.
Trump has said he plans to fix inner cities, rebuild highways and infrastructure, while erecting barriers against cheap imports, leading to higher consumption of industrial raw materials.
“But we think the market will be volatile in the near-term and we are cautiously optimistic about the market in a short term,” Soirat said, without giving more details.
Still, copper has attractive long-term fundamentals, he said, due to a limited number of new projects, depleting mines and the declining quality of the ore being mined.
Asked when Rio expects global supply to exceed demand, Soirat said: “It’s difficult to predict whether it will be three years, five years or seven years...But the outlook in the mid- to long-term is pretty healthy.”
Reporting by Yuka Obayashi; Editing by Christian Schmollinger
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