Top 6 Copper Market Drivers
- Dollar to Euro exchange rate
- China copper price (a proxy for demand)
- US capacity utilization
- Global production
- Refiner treatment charges
- Chilean copper production
Copper Market Commentary: The Word on the Street
Mining projects have hit the shelves for copper (and many other metals) as miners have turned to cutting costs and improving productivity of existing mines. From a fundamentals perspective, copper prices have struggled to gain any real price strength on the back of poor Chinese demand. Despite bullish sentiment from miners such as Rio Tinto (Rio recently claimed copper prices will recover faster than expected and outstrip supply within two years), it’s hard to see a demand scenario overtaking supply to create a deficit needed to send copper rallying.
Don’t mistake the slope of the price chart for positive stock performance. With the exception of Global Brass and Copper with a 6% stock price improvement from a year ago, the other producers have turned in dismal performances – BHP Billiton down 22% and Freeport McMoRan down a whopping 40% from one year ago.
Three-month copper closed the month of May at $6,018/mt, down nearly $300/mt from last month. Copper prices have rallied since February (though have fallen during the month of May) and in the short term, may continue to do so. However, copper remains in a long-term bearish market and the recent strength of the dollar could keep copper in its downtrend.
So What Should My Industrial Buying Strategy Be?
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