The picture for copper wasn’t pretty last month, with the crisis in China leading to a six-year price low for the red metal. But a recovery is already underway, thanks in part to a resurgence in stocks and a number of mine closures that will surely tighten the market for the foreseeable future.
Just last week, Glencore announced a string of mine closures that would lead to a reduction of some 400,000 tonnes of copper production in Africa, according to the Financial Times. That directly led to a copper price increase of more than 5 percent.
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Also helping matters has been the recent import window that allows refined copper to be shipped into China, allowing the Far East nation to unload much of its stock into the domestic market.
“Demand is looking a little more cheerful, but remains beset by headwinds,” Vivienne Lloyd, analyst at Macquarie, told the news source. “Improvements we begin to hear of, from power grid demand in particular, need to be maintained, while more lossmaking production should come offline in order for us to find stability in the recent price rally.”
Playing the long game with copper
Although copper prices remain weak despite the recent uptick, we can see a scenario in which producers curb production to bring supply down to realistic demand levels. Bridging the gap between now and two to three years from now will be the issue and may depend on even more mine closures to further tighten supply.
You can find a more in-depth copper price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds: