Beleaguered Copper Battered By Banking Investigation, Chinese Economy

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Another bad week for copper was prompted by news that China is investigating several companies for selling the same copper to multiple buyer banks to use as loan collateral.

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China’s shadow banking system has caused copper supply disruptions in the past so any reform of the system is a long-term good thing for metals buyers, but it could conceivably destroy any hope of a copper comeback in the short term. As usual, we wait and see.

The week’s biggest mover on the weekly Copper MMI® was the copper cash price, which saw a 3.3 percent decline on the LME to $6,800 per metric ton. This comes on the heels of a 1.2 percent increase the week before. Following a 1.0 percent increase in the week prior, the 3-month price of copper fell 2.4 percent on the LME last week to $6,770 per metric ton.

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Chinese copper prices were mixed for the week. The price of Chinese copper bar rose 0.7 percent to CNY 50,900 ($8,168) per metric ton after falling 0.5 percent during the previous week. The cash price of Chinese copper rose 0.6 percent to CNY 51,100 ($8,200) per metric ton after falling 0.5 percent during the previous week. The price of Chinese copper wire rose 0.6 percent to CNY 50,025 ($8,028) per metric ton after falling 0.4 percent during the previous week. At CNY 44,300 ($7,109) per metric ton, the price of Chinese bright copper scrap did not change since the previous week.

The cash price of primary Japanese copper fell 1.9 percent to JPY 731,000 ($7,137) per metric ton after rising 2.5 percent the week before. The price of US copper producer grade 122 fell 1.6 percent last week, settling at $3.79 per pound. Following a 1.6 percent drop, the price of US copper producer grade 110 finished the week at $3.79 per pound. The price of US copper producer grade 102 closed last week at $3.98 per pound, after a 1.5 percent drop. At KRW 9,640 ($9.44) per kilogram, the week finished with no movement for Korean copper strip.

The Copper MMI® collects and weights 12 global copper metal price points to provide a unique view into copper price trends. 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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