The monthly Copper MMI® registered a value of 65 for October, a decrease of 1.5% from 67 in September.
After 4 months of consecutive declines, copper prices are finally finding some support near the $5,000 per metric ton level. This price stabilization, after previous declines, is the typical price action of a bear market. There are some factors that could have caused copper prices to rally this month but the price action seen so far has been very poor.
First, the mining giant Glencore PLC announced in September that it would suspend production at 2 copper mines in Africa, taking about 400,000 mt of capacity out of the market. Also, there were mine disruptions in Latin America. The biggest copper mine in Chile, Collahuasi, cut its annual production by 30,000 mt. In addition, Peru the third-largest copper producer declared a state of emergency in the area around the Las Bambas mine after clashes between protesters and police resulted in 3 deaths. The country has struggled to resolve complaints from residents about the pollution from mines.
Not a Real Rally
Normally, traders would make copper prices rally after hearing about supply disruptions out of one of the major producer nations, such as Chile, but the rally so far has been very short lived.
It looks like, along with the rest of the industrial metals, weak Chinese demand is still the major price driver. Indeed, on September 22 copper prices suffered their biggest one-day slide in more than 2 months after China’s Purchasing Managers’ Index showed the biggest fall in manufacturing activity in 6 years.
What This Means For Metal Buyers
Not even news of supply disruptions helped copper rally in September. This is typical in falling markets. We wouldn’t discard a short-term copper rally from these low levels, but we can’t call this a major bottom yet.
A 3.61% decline for the cash price of primary Japanese copper left it at JPY $5,189 per metric ton. Last month, Korean copper strip prices dropped by 3.16% to $7.04 per kilogram. The 3-month price of copper ended the month on the LME at $5,071 per metric ton, slightly down from $5,076. The price of US copper producer grade 110 saw a small increase this month, rising from $3.06 to $3.07 per pound.
The Chinese copper cash price declined 2.42% to $6,189 per metric ton after falling the previous month. After dropping the previous month, the price of Chinese copper wire prices declined 2.32% to $6,028 per metric ton.