The Copper Monthly Metal Index (MMI) dropped slightly this month, from 79 last month to an index value of 78 for May.
Mild price decreases of less than 1% hit nearly all the prices in the index, with the exception of the Japanese copper cash price (which increased by less than 0.5%).
LME copper prices struggled to hold onto $6,500/mt during the past couple of months and recently dropped back again to trade in the $6,200/mt range.
Looking at the bright red line, the price now trades below the uptrend line drawn from the start of 2019, indicating price weakness.
At best, the price is stuck trading in a sideways band at the moment.
From a technical perspective, it appears that we may have recently seen the completion of what is called a “short-term double-top” type of formation — albeit a fairly short and flat one — which indicates further price declines (see points A and B).
Weakening Global Growth Impacted Copper Prices
Looking at recent trading volume — moderate but negative for several weeks now — prices seem likely to stay in flat territory for the foreseeable future. However, unlike some of the other industrial metals, copper managed to hold some of its price gains made this year.
Recent demand concerns have led to weakening prices. According to Codelco Chief Commercial Officer Roberto Ecclefield, demand for copper should grow by 2.3% this year, while mine production could slip by 0.5%, with smelter output flat. Therefore, he does not see this price slump lasting long.
According to Bloomberg, Codelco also forecasts a shortage in concentrate as new smelter capacity in China coming online this year increases competition for supplies, with the shortage growing during the second part of the year.
What This Means for Industrial Buyers
Copper’s bullish sheen receded of late, so now is the time to watch the market carefully for buying opportunities.
For more specific guidance, following our support and resistance price guidelines, request a free two-month trial of our Monthly Metal Buying Outlook.
Actual Copper Prices and Trends
This month, most of the copper prices in the index fell; however, all of the price decreases were mild at under 1%.
India’s copper cash price decreased by nearly 1%, as did China’s primary cash, copper bar and copper wire, as well as the LME primary 3-month price.