The Copper MMI (Monthly Metals Index) traded lower again this month, falling two points to 85. The Copper MMI dropped to December 2017 levels, driven by falling LME copper prices.
When looking at the long-term trend, copper prices have held above the dotted blue line since September 2016. Although prices dipped a bit below the blue dotted line at the end of March, the line represents the current copper floor. Prices falling below the dotted line could suggest a short-term price correction.
Meanwhile, trading volume appears to be about the same as last month, when selling volume appeared weak. As the selling volume remains weak, the downtrend seems more like a short-term price correction than a change of trend.
Buying organizations may want to closely follow copper prices in the coming month or read our Monthly Metal Outlook in order to anticipate copper price movements.
Copper Stocks and Supply
LME copper stocks currently stand at 324,900 tons, up by 13,075 tons since the start of 2017 and 85,500 tons since the start of 2016.
According to the International Copper Study Group (ICSG), the provisional 2017 refined copper deficit was 163,000 tons. The situation for 2018 will also depend on the supply side, as many of the largest copper mines have upcoming labor contract negotiations still pending.
On top of that, the Caserones copper mine in Chile announced a shutdown this month in order to replace a leaking pipe. However, this shutdown is only partial and may not have a big effect on copper production.
Both Chinese copper scrap prices and LME copper prices typically trade together. In March, Chinese copper scrap prices fell to $6,035/mt. LME prices also fell but remain in a long-term uptrend. The same is true for copper scrap.
The spread between Chinese scrap copper prices and LME copper seems to be wider than it was back in 2016 and 2017. A wider spread may boost scrap copper demand for the applications that it are suitable due to its lower price.
What This Means for Industrial Buyers
Copper prices are currently approaching December support (at $6,530/mt) levels, when prices last dipped during the bullish rally.
Buying organizations bought some volume then. As long as copper prices remain bullish, buying organizations may want to buy on the dips. For those who want to understand how to reduce risks, take a free trial now to the MetalMiner Monthly Outlook.
Actual Copper Prices and Trends
In April, most of the prices comprising the Copper MMI basket fell.
LME copper fell this month by 2.5%. Indian copper prices decreased by 2.45%, while Chinese primary copper prices fell by 2.1%. Prices of U.S. copper producer grades 110 and 122 decreased by 2.07%. Meanwhile, the price of U.S. copper producer grade 102 decreased by 1.97%, to $3.97/pound.