While copper’s recent gains can accurately be attributed to Chinese and US central bank data it is still a metal that’s very much in surplus. This situation will continue well into next year but it may actually go into deficit in 2016.
With a lack of new supply coming online, the market is headed to deficit territory. And, according to Jim Lennon, a consultant for Macquarie Securities, Chinese demand is the key to it all.
“China has accounted for over 100 percent of demand grown [for copper] over the past decade,” Lennon told Copper Investing News, adding, “up until 2010, Chinese copper demand averaged 17 percent per annum.” And while that number might have come down slightly, demand for copper from China is still a driving force behind the market.
With a 1.9 percent increase on Monday, June 23, Chinese copper bar was the biggest mover on the Copper MMI®. The Chinese copper cash price gained 1.9 percent to finish at CNY 51,800 ($8,322) per metric ton. Chinese copper wire prices inched up 1.9 percent to CNY 50,710 ($8,147) per metric ton. The price of Chinese bright copper scrap continues hovering around CNY 44,300 ($7,117) per metric ton for the fifth day in a row.
The price of US copper producer grade 122 rose 1.1 percent to $3.81 per pound. The price of US copper producer grade 110 rose 1.1 percent to $3.81 per pound. The price of US copper producer grade 102 increased 1.0 percent to $4.00 per pound. At JPY 716,000 ($7,014), the cash price of primary Japanese copper finished the market day up 0.1 percent per metric ton.
On the LME, the primary copper cash price inched up 0.7 percent to $6,777 per metric ton. After a 0.6 percent increase, the 3-month price of copper finished the day on the LME at $6,765 per metric ton.