The Copper MMI dropped this month four points as the industrial complex took a breather during September.
LME copper prices fell more than $500/metric ton during September, which has driven the decrease in the MMI value.
However, market watchers can see a new rally taking place within the base metals industry. Copper prices — along with lead and tin — increased sharply on heavy trading volumes. Buying organizations can expect upward movements within the bullish market.
In September, copper prices pulled back. Rallies and pullbacks occur frequently in a bullish environment, as base metal prices need to retrace to continue the upward movements.
For now, this uptrend appears sustainable.
Copper Scrap vs. LME Copper
Copper scrap serves as an alternative source of raw material to LME copper. Global copper production using scrap currently accounts for 12% of all copper production.
Therefore, MetalMiner has started to track copper scrap usage and its impact on LME copper prices.
According to FastMarkets, China appears to have enforced restrictions on copper imports. Those measures resulted in quota cuts and fewer licenses to various Chinese regions.
Although a complete ban on scrap copper imports has yet to be confirmed, analysts still speculate the ban could impact up to seven different types of scrap copper imports.
China, of course, serves as a major global buyer of copper scrap. However, Chinese scrap copper imports fell in 2016. This year, increasing LME copper prices resulted in an increase of alternative sources of copper.
Chinese scrap copper imports are up by 14% this year. Some analysts suggest that Chinese buying organizations may be shoring scrap copper supply to avoid shortages next year.
What This Means for Industrial Buyers
As Chinese scrap copper imports are rising, buying organizations may want to monitor copper scrap prices closely to understand the impact on LME copper prices.
For LME copper prices, buying organizations may want to read more about our longer term copper price trends with our free Annual Outlook. In bullish markets, it pays to quickly adapt one’s buying strategy to reduce risks.
Actual Copper Prices and Trends
LME copper has retraced from its late uptrend this month, with a decrease of 4.22%. Copper prices ended September at $6,501/mt. Indian copper prices dropped by 4.9% to $6.55/kilogram, while Chinese primary copper prices fell by 3% to $7,743.84/mt. Chinese copper scrap fell 9.8% to $5,814.64/mt.
Prices of U.S. copper producer grade 110 and 122 decreased by 3.65% falling to $3.69/pound. The price of U.S. copper producer grade 102 dropped by 3.48%, falling to $3.88.