Copper futures are rallying as prices cement themselves above the psychologically important $3 threshold. The industrial metal is continuing its 2020 rally on Monday amid long-term bets on the industrial metal and strengthening foreign demand. As August winds down, copper prices will have enjoyed a respectable gain.

December copper futures advanced $0.044, or 1.46%, to $3.0635 per pound at 16:27 GMT on Monday on the New York Mercantile Exchange. Copper prices are coming off a 4% weekly gain, and they will post a 5.1% monthly surge. Year-to-date, the red metal is up 9.5%, with most of the rally occurring since June.

According to the Commodity Futures Trading Commission’s (CFTC) latest Commitment of Traders (COT), hedge funds and large speculators raised their total net position to 47,864 net contracts in the week ending August 24. This is up more than 4,300 net contracts from the previous week. Net longs are now trending at a 27-month high.

But why is Wall Street bullish on copper?

A new report suggested that China is engaging in panic buying, with domestic inventories sliding. Although Beijing has imported more copper, inventories at London Metal Exchange-monitored warehouses have dropped 40% from March to a 13-year low. Because it is the world’s largest copper consumer, China is buying copper at record levels.

Jonathan Barnes, associate consultant for copper at the London-based metal and minerals research firm Roskill, said in a research note:

China is importing more refined metal from nearly every country suggesting a structural shift not a temporary change. If you are looking for signs of panic buying, you can find evidence of that in China – total Chinese stocks represent less than two weeks’ consumption at current rates of use.

The latest signs of bullishness come after Chile reported the second decline in copper production since the COVID-19 public health crisis. According to the nation’s statistics agency, the world’s largest copper producer saw its output levels slip 4.6% year on year in July to 467,913 tons.

In other metal commodities, December gold futures picked up $4.799, or 0.243%, to $1,979.70 per ounce. October silver futures soared $0.725, or 2.61%, to $28.515 per ounce. October platinum futures added $2.60, or 0.28%, to $942.60 an ounce. October palladium futures tacked on $64.20, or 2.88%, to $2,295.70 an ounce.