On Tuesday, March 11, the day’s biggest mover on the MetalMiner IndX℠ was Chinese copper wire, which saw a 6.4 percent decline. As noted in yesterday’s daily Copper MMI story, uncertainty over the amount of copper being warehoused by Chinese banking institutions as an investment is causing copper’s free-fall there.
MetalMiner analyst Stuart Burns notes that even the best guesses of how much copper is being warehoused there are still just guesses, meaning that the metal could quickly bounce back if significant quantities are sold off.
After falling 0.8 percent, the price of Chinese copper bar reached a 30-day low. The Chinese copper cash price reached a 30-day low as well after decreasing 0.8 percent. For the fifth consecutive day, the price of Chinese bright copper scrap held flat.
“Estimates of China’s copper inventory are hazy, at best,” Burns said. “The best guess, according to Reuters, is about 700,000 metric tons held in Shanghai’s bonded warehouse zone. In the past when inventory has become stressed, maybe by a negative arbitrage window, metal has readily flowed out of the country and with a currently physically challenged global market – the LME is in backwardation with prompt delivery tightness – more metal would actually be welcome.”
In other copper markets, the cash price of primary Japanese copper fell 3.6 percent. There were one percent drops for all US producer grades. The price of US copper producer grade 122 fell 1 percent. The price of US copper producer grade 110 weakened by 1 percent. The price of US copper producer grade 102 declined 1 percent.
Despite the uncertainly about Chinese copper and the drops in Japan and the US, after a couple of days of decreasing prices on the LME, the copper 3-month price held steady. The primary copper cash price steadied following two-days of dropping prices on the LME.