Commodities markets continued to soar on Monday morning in London as news of shortages pushed key metals to all-time highs.
Copper (HG=F) futures contracts rose 2.4% by 9.30am in London to hit new highs of $4.86. Iron ore was also on a tear in China, surging 10% to a record high. Steel rose 6%.
"There could be a lot of speculative buying and trading pushing commodities higher but for now there does still seem to be a lot of momentum behind the trade and reasons to think fundamentals will continue to support," said Neil Wilson, chief markets analyst at Markets.com.
Six of the 10 top FTSE 100 (^FTSE) stocks on Monday morning were miners or commodity traders. Rio Tinto (RIO.L) was up 3.5% by 9.30am in London. BHP Group also (BHP.L) rose 3.4%. Fresnillo (FRES.L) was up 2.2%, while Antofagasta (ANTO.L) rose 2.5%.
The moves upward follow strong gains on Friday when spot iron ore broke $200 (£143) a tonne for the first time and copper hit more than $10,200 per tonne.
Mining stocks appeared to offset the weakness in the FTSE which rose 0.2% in comparison. It is being dragged down by consumer goods and tobacco companies.
“The commodities market continues to be on fire with a near-8% rally in iron ore and a 2.6% jump in the price of copper setting the tone for what could be an interesting week on the markets,” said AJ Bell investment director Russ Mould.
“Commodities are being driven by stronger demand as the global economy recovers from the pandemic and supplies are getting tighter."
Analysts at UBS said the near-record copper prices, combined with funding of COVID-19 support packages in Chile, has seen the debate around "super-profits" tax for copper miners re-emerge.
"In our view a more likely outcome is an increase in royalties that negatively impacts earnings/FCF for the miners but would not dramatically change the outlook for Chilean copper output," analysts wrote in a note. "If we are wrong this creates material upside risk to medium-term outlook for copper prices."
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