Caterpillar Inc. Calls Copper Prices Despite Monthly Index Rise

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MetalMiner Copper Price Index December 2012 graph

Source: MetalMiner IndX(SM)

The monthly Copper MMI® registered a value of 97 in December, an increase of 1 percent from 96 in November.

The increase came primarily due to a slight 1 percent increase in the China copper cash price, along with an uptick in the China bar price of 1 percent and an increase in the 3-month LME price, two items weighted more significantly in the MetalMiner monthly price index.

A month ago, MetalMiner paid careful attention to the layoff announcement by Caterpillar, which suggested the prospects for copper may not look so bright. MetalMiner’s own Stuart Burns also published an analysis suggesting copper prices may see only a modest rise throughout 2013.

Andy Home, a Reuters columnist, analyzed a report conducted by the SEC to determine whether a correlation exists between copper stocks (inventory levels) and prices.

SEC Conclusions

The SEC said no linkage exists between the two, but Home points out the analysis failed to examine stock levels in Shanghai. The SEC did find a relationship between “total stocks and price.” Those total stocks included Shanghai futures stocks, using estimates provided by the International Copper Study Group (ICSG), along with Comex and LME stocks, however they did not include Shanghai bonded stocks.

Home’s point — “Just because the Shanghai bonded stocks mountain can’t be statistically calculated doesn’t mean that it doesn’t exert a major price influence” — brings us back to Caterpillar. Do copper price watchers know something that we don’t? It appears that answer has moved toward yes.

Other Monthly Metal Market Movers
today's copper prices - MetalMiner IndX

Chinese copper wire finished the month up 1.3 percent per metric ton.

The price of Chinese bright copper scrap fell 0.7 percent over the past month, the second straight month of declines.

The price of Korean copper strip rose just under 1 percent. The Japanese copper cash price fell just over two percent.

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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