Copper MMI: LME Copper Prices Continue Slide

by on

In September, the Copper Monthly Metals Index (MMI) fell again by four points. The Copper MMI has continued to slide, mainly driven by weaker LME copper prices in August. The current Copper MMI stands at 73 points.

Buying Aluminum in 2018? Download MetalMiner’s free annual price outlook

The recent Copper MMI hit July 2017 levels, when prices breached the $5,980/mt then-resistance level and started to skyrocket.

Source: MetalMiner analysis of Fastmarkets

Copper pricing has been sliding, driven by concerns about a Chinese economic slowdown. However, fundamentals indicate the metal will remain in a deficit. Stock levels have decreased on the major exchanges.

Supply issues have eased in most Chilean mines. Workers at the Chilean Escondida mine signed a new labor agreement after the government mediated  the conflict. However, workers at the Caserones mine remains on strike.

Meanwhile, copper production at Codelco, Chile’s state-owned mine, increased 2% in the first six months of 2018 to 813,000 tons.

Russia seems to have moved toward developing the base metal, too. Construction has just started at the biggest undeveloped copper deposit in Russia. Udokan serves as the largest undeveloped copper deposit in Russia, with 26.7 million tons of copper (it is also one of the biggest in the world).

However, copper faces one large problem. Smelting capacity continues to grow, but the base metal availability has moved moved toward a larger deficit. Therefore, buying organizations may see decreasing treatment and refining charges next year.

Chinese Scrap Copper

LME copper prices and Chinese copper scrap prices tend to follow the same trend. Both appear to be in a long-term uptrend.

However, both LME copper and scrap copper prices fell again this month. So far in September, copper scrap prices have fallen less than LME copper prices. The spread has tightened again (the wider the spread, the higher the copper scrap consumption and, therefore, the price).

Source: MetalMiner data from MetalMiner IndX(™)

Copper scrap has come into the line of fire of the new 25% tariff imposed by China. The tariff went into effect Aug. 23. The new levies imposed by China on $16 billion of U.S. goods include U.S. scrap metals, waste paper and plastic cargoes.

In Q1 of this year, China imported 132,000 metric tons of copper scrap. The U.S. serves as the second-largest supplier of copper scrap to China, just behind Hong Kong.

What This Means for Industrial Buyers

Despite the recent dip, LME copper prices still remain strong. Buying organizations will want to understand how to react to the latest copper price movements. Adapting the right buying strategy becomes crucial to reduce risks. Only the MetalMiner monthly outlooks provide a continually updated snapshot of the market from which buying organizations can determine when and how much to buy of the underlying metal.

Click here for more info on how to mitigate price risk year-round and request your free trial to our Monthly Metal Buying Outlook.

Actual Copper Prices and Trends

In August, most of the prices comprising the Copper MMI basket decreased.

LME copper fell again, dropping 6.21% month over month as of Sept. 1. Indian copper prices decreased by 5.9%, while Chinese primary copper prices fell by 4.8%.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Prices of U.S. copper producer grades 110 and 122 fell by 6.42%. Meanwhile, the price of U.S. copper producer grade 102 fell by 6.10%, down to $3.54/pound.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.