scrap copper price

The monthly Copper MMI® registered a value of 75 in April, an increase of 2.7% from 73 in March.

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The suspicious copper rally is still in place. Copper has rallied as much as 17% since it hit its trough in February. The move might seem impressive for the non-trained eye, but copper is just zigzagging.

Copper's Selling, But We're Not Buying

After the huge drop during the second half of last year, we believe that there is no point in freaking out over this two-month rally. Picking bottoms is very hard and definitely not a good strategy for metal buyers. Was February the bottom of copper's bearish market? Nobody knows. But we do know that trying to guess what was the bottom is a terrible strategy to take with copper since 2011. Prices have kept on falling, trough after trough... after trough.

In the fundamentals side, we don't see any game-changing factor that could drive a significant upturn in copper prices. The market remains far from being in deficit and the macroeconomic outlook from China remains poor. Copper demand is lacking momentum.

Now, with the fundamental picture being dormant, at best, can we expect copper prices to rise above last year's levels? That seems very unlikely. Especially while a strong dollar and low oil prices are having a depressing effect on commodities, and many other base metals are making record lows.

Before copper is ready to turn around, we'll have to see more price strength changes in the demand outlook and commodity markets. Both need to turn upward. We believe that the last four years gave copper buyers reasons enough to wait for real signs of strength before making large volume commitments.

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The US dollar weakened and eased concerns about its impact on corporate profits, while the euro recovered from a 12-year low in trading today.

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After months of strong jobs data, expectations have been growing that the Federal Reserve would signal a June rate rise at a meeting that begins on Tuesday. A stronger dollar erodes purchasing power for commodities. That, plus questions over China's economic growth after comments by Premier Li Keqiang added headwinds to copper, analyst Joel Crane of Morgan Stanley in Melbourne told Reuters.

"What we've seen on China's data indicators so far is fairly negative, so it's not surprising that people would be worried about whether the post-New Year recovery is underway," Crane said.

Premier Li vowed to keep China's economy growing at a reasonable speed, even as he also said authorities could do more to stoke growth, which triggered a rally in Chinese equities.

The prospect of more Chinese stimulus, and a rise in interest rates in the US, helped copper to a weekly gain. Prices have been gaining ground as China's factories ramp up after the Lunar New Year, climbing from 5-1/2 year lows of under $5,400 a metric t0n in January, but slowing economic growth and ample refined supply has blunted momentum.

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3-month copper surged to a six-week high on Tuesday after Federal Reserve Chairwoman Janet Yellen said it was preparing to consider rate rises on a meeting-by-meeting basis. Greece also secured its bailout extension from the EU and oil prices rebounded.

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Yellen said it would be several months before the Fed expects to raise interest rates but the consideration was now on the table. Three-month copper on the London Metal Exchange jumped to a session peak of $5,846 a metric ton today, the strongest since Jan. 13, and closed 2% higher at $5,785.

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The monthly Copper MMI® ticked up to 73 in March – after its fall off a tall building down to 70 in February, copper's dead cat bounced impressively 4.3% from its big drop.

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While it's one of only two indexes up this month, you shouldn't read too much into this bounce:

On the London Metal Exchange, itself, copper rose 7% in the month of February. This move shouldn't come as a surprise, either. Copper fell 25% since July 2015 and it needs some time to digest its super-sized feast of loss. Remember, prices don't move in a straight line, they move in a zig-zag.

Therefore, this move should be taken as a normal reaction within a falling trend – simply a temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. There is absolutely nothing to suggest that copper has eight more lives after this dead cat bounces.

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A. Gary Shilling writes that copper's fall will continue because producers have a great incentive to increase output despite low market prices.

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In his Bloomberg View piece, Investment and Money Manager Shilling blames the commodity boom of the early 2000s that led to massive building and expansion in China.

"It’s not economical to suspend some of these projects due to high sunk costs and shutdown expenses," Shilling writes. "Some producers, moreover, may not be free to slash output as prices swoon, especially if they’re government-controlled and need foreign exchange to service sovereign debts."

Copper is produced mainly in the developing countries of Chile, Peru, Congo, Zambia and Russia. China is a net exporter of aluminum but an importer of copper. The International Copper Study Group, made up of copper-producing and consuming countries, says demand will rise just 1.1% this year while output jumps 4.3%.

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Teck Resources Ltd., Canada’s second-largest mining company, is looking to buy a copper mine as the current slump in prices puts pressure on some rivals to sell.

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Teck, which also produces coking coal and zinc, is interested in locations with low political risk, Chief Executive Officer Don Lindsay told Bloomberg News in an interview. He declined to comment on specific assets.

“There are a couple of things that we think might shake loose,” Lindsay said. “We’re looking more towards the end of the year.”

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Copper dropped on Tuesday from a seven-week peak hit in the previous session as optimism over a weekend interest rate cut in top consumer China dissipated and inventories continued to rise.

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The main stock indexes in China, which consumes some 45% of the world's copper, fell more than 2% earlier as regulators' approval of a flood of new initial public offerings prompted worries over tighter liquidity.

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Copper ended the week with its highest price on the London Metal Exchange in six weeks. China cut interest rates again after the weeklong Lunar New Year celebration there.

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Copper prices rose to a six-week high as an interest-rate cut bolstered demand prospects in China, the world’s biggest user of the industrial metal.

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China’s central bank on Saturday reduced the benchmark-lending and deposit rates by a quarter percentage point. The nation is taking steps against deflationary pressures before a gathering of the legislature where the Communist leadership typically unveils its goals for the year. In February, copper jumped 7.3%, the most since September 2012.

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A key signal in the copper market is starting to flash green, with bets that copper prices will continue to fall recently hitting a record high on the London Metal Exchange, though they’ve since started to fall back. For some, that suggests the red metal’s fortunes may be about to turn. At these levels, there’s simply no more stomach to bet against copper, they say.

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“People have kind of run out of ammunition,” Guy Wolf, global head of market analytics at Marex Spectron, a broker, told the Wall Street Journal. “There’s no more new money to come in.”

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