The Copper Monthly Metals Index (MMI) rose 1.7% month over month, as copper prices remained range-bound in the immediate aftermath of Russia’s invasion of Ukraine. However, copper prices have jumped to start March.
Copper prices remained significantly unaffected by the conflict between Russia and Ukraine. From a mining perspective, more copper supply is scheduled to come onstream. Even after the day of the invasion, prices continued to trade within range, with no significant breakout in either direction.
Federal Reserve poised for March rate hike
All eyes are on the Fed ahead of its March 15-16 policy-setting meetings.
Inflation hit 7.5% in January, the highest since 1982. The Russian invasion of Ukraine adds further pressure, which could see that number increase.
As Federal Reserve Chairman Jerome Powell warned the Senate Banking Committee, “commodity prices have moved up – energy prices, in particular,” due to the conflict, the Wall Street Journal reported. As a result, “we’re going to see upward pressure on inflation, at least for a while,” he added.
WTI crude oil prices have held above $100/barrel since the beginning of March.
In order to firm the dollar, the Fed will seek a much-anticipated rise in its benchmark short-term interest rate. While speculation about the size of the upcoming rate hike continued, Powell confirmed to a House panel March 2 that he is “inclined to propose and support” a traditional quarter-percentage-point increase. Powell expects inflation to peak and descend during the year. However, he noted “to the extent inflation comes in higher … then we would be prepared to move more aggressively.”
Meanwhile, copper prices spiked in the early days of March. Copper prices hit a 10-month high March 3.
As copper prices have a historically inverse relationship with the U.S. dollar, the Fed’s actions will likely add downward pressure to prices.
As buyers of copper (and other metals) monitor upcoming decisions by the Fed, it’s important to inform their buying strategies by focusing on spotting metal price trends.
MMG’s Las Bambas mine faces another blockade
The saga between the Las Bambas mine and Peruvian protesters continues, Reuters reported.
The latest blockade is the third of this year alone. The protesters are obstructing an essential transport road.
Chinese MMG’s Las Bambas mine faced multiple blockades that derailed production over recent months. Protests at the mine date as far back as 2016, when the mine opened. Local communities seek expanded benefits from the mine’s profits. The most recent series of blockades, however, began following the election of leftist Pedro Castillo as president last year. His initial but subsequently rejected proposals included an increase to mining taxes.
The mine is one of Peru’s largest, accounting for roughly 2% of global copper production. As such, the unrest adds particular pressure to the Peruvian economy and overall copper output.
The Las Bambas mine represents 1% of Peru’s GDP. Meanwhile, MMG projected its 2022 copper concentrate output at the mine to hit 300,000 to 320,000 tons. However, ongoing protests will likely derail that forecast.
Furthermore, SNMPE, Peru’s mining trade association, estimated that the daily cost of a blockade for MMG totals roughly $9.5 million. Thus far, MMG and the Peruvian government have yet to reach an agreement with the protesters.
The MetalMiner weekly newsletter will continue to monitor developments in the copper market (and other metals), including the ongoing situation at Las Bambas.
Chilean copper production hits snag in January
According to Cochilco, the Chilean Copper Commission, copper production declined in January. Total production during the month fell 7% year over year to 425,700 tons. January’s drop reflects the lowest since 2011.
The largest global producer, Codelco led the losses. Codelco’s production fell 15% to 120,800 tons. Meanwhile, Escondida reported a 4.4% fall to 81,000 tons. Collahuasi saw a 10% drop to 51,300 tons. Cochilco provided no explanation for January’s drop.
Despite Chile’s slow start to the year, the International Copper Study Group projects a 3.9% increase in global copper mine production in 2022. It also forecast an overall refined copper surplus of 328,000 tons.
Better time your metal market purchases, including copper, with the MetalMiner Insights platform.
Actual metals prices and trends
The LME three-month copper price fell by 3.36% month over month to $9,945 per metric ton as of March 1.
Chinese copper bar declined by 1.54% to $11,223 per metric ton. Chinese copper scrap fell by 1.47% to $10,172 per metric ton.
U.S. copper producer grades 110 and 122 rose by 2.46% to $5.41 per pound. Producer grade 102 rose by 2.36% to $5.63 per pound.