Monthly Copper MMI® Holds Steady at 88, Wait-and-See Before Hedging

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The monthly Copper MMI® registered a value of 88 in August, steady with July’s value.

Copper_Chart_August-2014_FNL

At this point, it is hard to have a strong opinion on the future trend of copper prices since all drivers are not pointing in the same direction.

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The supply and demand picture looks kind of blurry. The metal was expected to be in oversupply this year due to new mines coming into play and expectations of a drop in demand from a slowing China. However, these new mines haven’t gone into production yet and China is getting a boost thanks to stimulus measures. As no major event is happening in the copper market,  it seems hard to make predictions based on supply and demand balance at this point, since expectation about the future is what will make prices move and we don’t know what, exactly, has already been priced in.

Meanwhile, the USD dollar made a bullish move recently. A stronger dollar will have a depressing effect on copper and the rest of the base metals.

Copper price since 2012

Copper price CME since 2012

The technical picture still looks bearish. Despite a short-term rise, copper is yet to prove itself. We would be bearish if it wasn’t for the good performance that other industrial metals are having. However this is just a warning signal and it needs copper confirmation before making early decisions.

What This Means For Metal Buyers

It still looks early to go long on copper. Let the market consensus tell you what to do. Be hedged if copper manages to break above $7,500 per ton.

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Following a 4.3 percent upswing, the cash price of primary Japanese copper closed the month at $7,473 per metric ton. The 3-month price of copper inched up 2.7 percent on the LME to $7,120 per metric ton. On the LME, the cash price of primary copper gained 2.6 percent to finish the month at $7,135 per metric ton. Finishing at $3.92 per pound the price of US copper producer grade 110 saw a 1.0 percent shift lower for the month. After a 1.0 percent increase, the price of US copper producer grade 102 finished the month at $4.11 per pound.

The Chinese copper cash price ended the month at $8,379 per metric ton, down from $8,379. After rising the previous month, Chinese copper wire prices dropped 0.7 percent to $8,165 per metric ton.

At a price of $9.33 per kilogram, Korean copper strip did not budge the entire month. Hovering around $7,176 per metric ton for the month, Chinese bright copper scrap remained unchanged.

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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