Copper price continues to rise as supply tightens

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copper mine

Gary Whitton/Adobe Stock

The copper price has resumed its rise this month after taking a brief pause in January.

Meanwhile, on the supply side, tightening began last year and could exacerbate in the year ahead. Strong demand from China, lack of new mine investment and enthusiasm about copper’s role in the renewables revolution are all contributing to the metal’s bullish run.

Copper’s outlook is strong, MetalMiner’s Stuart Burns explained earlier this week. However, it would not be a surprise to see short-term retrenchment.

“So, for investors to take profits and the copper price to fall back should not come as too much of a surprise after such a strong rise in prices,” he wrote.

“Furthermore, it does not undermine the longer-term bull narrative for the metal. It does suggest, however, copper consumers think carefully before fixing all their requirements for the year at today’s price.”

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Global copper mine production down 0.2%

Mine output — or lack thereof — is contributing to the copper price hot streak.

According to data from the International Copper Study Group, global copper mine production fell by 0.2% year over year during the first 11 months of 2020. The reduction narrowed as the year progressed after a 3.5% aggregate decline in April and May.

Furthermore, the global copper market recorded an apparent deficit of 590,000 metric tons.

By country, second-largest copper producer Peru has recovered after COVID-19 impacts earlier in 2020. Peru’s copper mine output reached its highest levels last year in October and November.

Meanwhile, top producer Chile saw a decline in output from July-November. However, output through the first 11 months of the year matched that of the first 11 months of 2019.

Indonesian output rose by 36%. Output in the Democratic Republic of the Congo and Panama also increased.

Refined copper production picks up

On the other hand, refined copper production rose by 1.8% during the first 11 months of 2020.

Chile’s electrolytic refined output picked up by 28%. Meanwhile, Indian refined output fell by 19%.

Copper price surge

After a sideways January, the copper price has picked up again in recent weeks.

The LME three-month price closed Tuesday at $9,126 per metric ton. The copper price is by more than 14% over the last month.

The ICSG noted the average LME cash price for January reached $7,970.50 per metric ton, or up 9.8% from the December 2020 average.

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