scrap copper price

The monthly Copper MMI® registered a value of 66 in September, a decrease of 1.5% from 67 in August.

Copper_Chart_September-2015_FNLThe red metal has done nothing but fall since its peak in 2011. A series of lower highs and lower lows put this metal in what we call a textbook bear market.

Copper downtrend since 2011

Copper’s downtrend since 2011. Source: MetalMiner.

The declines, however, were steeper this year. Investors particularly dislike copper, as worries about China’s economy are rising.

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China’s stock market crash and the devaluation of its currency are just aggravating copper’s bear market.

Weak demand in the face of a glut of metal keeps driving prices down. China is producing more copper and importing less, weighing on an already oversupplied market. China’s copper imports fell more than 10% this year to date, while its copper production rose 9%.

Manufacturing Demand Plummets

On top of that, China’s manufacturing PMI fell to a more than 6-year low of 47.1 in August. Construction and manufacturing numbers keep giving investors reasons to remain bearish.

With prices at these low levels, according to external sources, 17% of copper mines are producing at a loss. While many producers are aggressively doing all they can to move down the cost curve, others are also cutting production. Glencore PLC recently revealed plans to suspend production at two African mines. That will cut its copper output by nearly a fifth. These facilities will not operate for 18 months while the company builds lower production cost facilities to fight the current low prices.

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Many are arguing that we are close to the bottom of the cycle with copper. However, it could be some time before the demand picture changes or enough capacity is closed to impact prices. As copper has taught us over the past few years, better to wait for the facts than be too early calling for bottom.

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The monthly Copper MMI® registered a value of 67 in August, a decrease of 8.2% from 73 in July and an all-time low.


Copper prices hit another fresh low last month. Three-month LME prices are near $5,000 per metric ton, a level last seen in 2009. For many months now, producing costs relative to prices have been under close scrutiny in metals like aluminum and nickel. Now it’s copper’s turn.

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Prices Below Production Costs

Many analysts are arguing that copper prices have fallen to the point where cost of production is exceeding the spot price, and many miners are going to look at cutting production and future spending. Does that mean that higher-cost producers will start closing capacity, triggering a supply response and therefore end this copper bear market?

First, cost-curves are not constant targets. They fluctuate depending on a bunch of factors such us input costs, exchange rates, etc. Copper prices are not the only thing falling. The entire commodity market is sinking, with falling energy prices continuously lowering input costs. Moreover, a stronger US dollar is lowering the costs in local currencies like the Chilean peso.

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Second, even when produces are underwater, they tend to hang out as long as they can. Closing mines is usually a later response to financial and social pain.

What This Means for Copper Buyers

In conclusion, it’s good to understand where production costs are relative to prices but they are not useful when it comes to guessing a price bottom. Prices can remain below production costs for long periods of time, as we’ve seen in aluminum and nickel before.

The market probably won’t change that much until we see a resurgence in demand. Although we could see some short-term rebound in prices, the long-term picture doesn’t look good yet. On January 2014 we were bearish on copper, today we still are.

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The Copper MMI® collects and weights 12 global copper metal price points to provide a unique view into copper price trends over a 30-day period. For more information on the Copper MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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The monthly Copper MMI® registered a value of 73 in July, a decrease of 2.7% from 75 in June.


Copper suspiciously rallied in the first quarter, gaining almost 20% from trough to peak.

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However, copper prices fell again in May and June and those previous gains have almost vanished. The copper rally was always suspect at best.

Chinese Construction Feeding the Bear

The bearish commodity market is definitely not encouraging investors to pour money into copper. Another big factor that doesn’t help to lure investors into copper is weak Chinese demand for the metal. The latest Chinese numbers show poor demand from key sectors:

  • In the first five months of current year, real estate development firms purchased 76.50 million square meters of land, a year-over-year (YoY) decline of 31%. The floor space of completed buildings declined 13.3% YoY as of May. Finally, Chinese real estate firms have started construction on only 503 million square meters as of May, falling 16% YoY.
  • A lower growth rate in China’s automobile sector also hits copper’s demand. China’s passenger car sales only grew by a mere 1.2% YoY in May, sliding 3.6% from the previous month.

Meanwhile in May, China produced 0.65 million tons of refined copper, a 6% YoY increase.

What This Means For Metal Buyers

The latest figures don’t give investors reason to think that copper’s fundamentals are set to tighten up and, overall, the market sentiment on commodities is bearish. We shouldn’t expect copper to make significant upside moves.

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This September: SMU Steel Summit 2015

The Copper MMI® collects and weights 12 global copper metal price points to provide a unique view into copper price trends over a 30-day period. For more information on the Copper MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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The red metal met the Red Cross earlier this week in the kickoff post of our series on health-acquired infections (HAI) and copper’s role in the war against them – but what hospital procurement officers and facilities management departments may want to know is, what’s up with the copper price?

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First step in the multi-step program of “What’s Up With the Copper Price?” is a look back at where prices have been: MetalMiner’s monthly Copper MMI® registered a value of 75 in June, a decrease of 2.6% from 77 in May.


The index decline was driven mainly by spot and 3-month London Metal Exchange prices, US copper producer grades 102 and 110, and Chinese copper wire.

What’s Up With That?

Second step in the multi-step program of “What’s Up With the Copper Price?” is knowing some of the underlying fundamentals that may have to do with its shift. For that, we turn to MetalMiner Editor-at-large Stuart Burns, who writes that:

“Analysts expect China’s copper demand to grow by 4% this year, yet that figure is based on considerable use in power grid investment and assumes government spending plans will be met. Power grid investment actually fell by 8.65% in April, according to the FT, and in the first four months of this year China completed Rmb86.6bn of grid investment, only 20% of the planned amount for the year.

Investors agree with the pessimistic outlook cutting their net long positions in copper, joining Chinese speculators who have been betting against copper all year.

A CNBC report says recent weakness is due to weak premiums, high scrap discounts and a failure of the seasonally strongest quarter for copper to translate into solid demand. China’s factories are now approaching a summer slow-down and with it lower metal consumption.”

Outside China, there’s always Mongolia – and the Oyu Tolgoi copper mine, from which Rio Tinto‘s recent bullishness is born. According to the FT, “Rio Tinto recently forecast that copper prices will recover faster than expected with demand outstripping supply within two years. This bullish forecast comes as the Anglo-Australian miner steps up talks in May with the Mongolian government aimed at finalizing a deal on a $6 billion expansion at Oyu Tolgoi, which had been stalled for months. The lack of new copper projects in the pipeline could result in a market deficit earlier than expected,” the paper indicates, “but even if Rio Tinto was right, 2 years is still a long period of time where we could see further price declines.”

What’s Up With the Market?

For the third step in the multi-step program of “What’s Up With the Copper Price?”, we cast our focus onto the future by turning to our metals procurement specialist, Raul de Frutos:

“Copper prices have been rallying since February and, in the short term, they could continue doing so. For the short term, consider placing orders now for known demand. Don’t buy long-term forward, as copper is in a bearish market and we expect prices to lose steam soon and come back to lower levels.”

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And to get this month’s complete monthly copper price movements, see below:

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Is this a serious rebound in copper prices? Hmm… we still doubt it.

The monthly Copper MMI® registered a value of 77 in May, an increase of 2.7% from 75 in April.

Not a Demand-Based Surge

Copper prices have surged so far this year but prices are still well below what they were just a year ago.

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Demand coming from China is still weak. We believe that traders likely won’t get evidence of a meaningful uptick in demand as Chinese demand remains weak and not likely to make a significant comeback in the medium term. Therefore, demand alone has little chances of supporting prices through the balance of the year.

Supply Side? Nope

On the supply side, there have been some constraints in Chile (the largest copper producing nation) because of climate and labor problems. On the other hand, major copper miners are cutting costs. This helps miners keep producing even while copper prices fall, as major input costs like crude oil declined. Just this year, the industry’s total costs on average fell 6%. The industry seems well-supplied and at this point, we don’t see warnings in the supply side with the potential to dramatically change the direction of prices.

What IS Causing the Rally?

With this said, two things seem to be causing the recent copper’s rally:

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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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