copper price

The Copper Monthly Metals Index (MMI) increased slightly this month to 73, compared to last month’s value of 71, with all copper prices in the index increasing mildly.

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Overall, the LME copper price moved up in October but did not quite make it back to the $6,000/mt price level.

Source: MetalMiner analysis of London Metal Exchange (LME) and FastMarkets

Even with the recent increase in prices, levels remain constrained, still hitting resistance around $6,000/mt.

SHFE Copper Prices Fail to Gain Value Once Again in October

SHFE copper prices continued to move sideways, with the trading range becoming more limited recently; prices still look slightly stronger, as lows increased in October.

Source: MetalMiner analysis of FastMarkets

Still, a lack of stronger upward momentum for prices indicates a lack of copper demand.

China’s Copper Smelters Plan to Increase Treatment Charges

Insiders indicated China’s top copper smelters plan to increase Q4 treatment and refining charges (TC/RCs) by 20% over Q3 rates, from $55 per ton to $66 per ton, according to Reuters. Rates have hit seven-year lows recently. Last year, during Q4 2018, charges were higher at $90 per ton.

The TC/RC rate gets set on an annual basis during November by the China Smelters Purchase Team (CSPT), which includes representation from most of China’s top smelters. The agreed-upon rates act as a spot processing price floor for CSPT members.

Some question whether the rate increase will stick at this time due to recent concentrate shortages, combined with some recent copper capacity expansion, leaving smelters to compete for concentrate through lower TC/RCs.

For instance, China’s Zijin Mining, recently increased capacity by 150,000 tons per year (a sizable increase). However, in early November, Zijin announced an expansion in its copper mine holdings through the acquisition of Freeport-McMoRan’s share of a copper-gold mine based in Serbia for $390 million, according to press reports.

The acquisition increases the company’s copper resources by 7.72 million tons, a boost of 15.6%, to a total of 57.24 million tons.

Weak Demand in China

Additionally, growth in China looks set to slow further — down to 5.8% in 2020, according to the most recent IMF estimate.

China’s Official NBS Manufacturing PMI fell to 49.3 in October, compared to 49.8 in September, marking a sixth consecutive month of contraction.

In contrast, China’s Caixin PMI registered a solid increase in October, falling clearly in expansionary territory.

Long-term Supplies Abundant, Despite Short-term Supply Disruptions

Due to the nature of mining, supply disruptions from weather in any given year tend to be normal, rather than unusual.

Additionally, labor issues can result in mining disruptions on a fairly frequent basis.

This year proved no exception, as recent supply disruptions broadened the global deficit situation this year.

For example, Antofagasta PLC released a statement indicating copper production this year will range from 750,000-770,000 tons, compared to the previous estimate of 750,000-790,000 tons. The downward revision accounts for labor-related mining disruptions, mainly around the Los Pelambres mine, which reduced production by around 10,000 tons total.

However, new sources of supply will help alleviate concerns of longer-term deficits, particularly as demand for copper will continue to increase due to copper’s role as a battery metal for electric vehicles.

MetalMiner’s Stuart Burns recently pointed out Anglo American’s $5 billion copper project,  based in Quellaveco, Peru, likely holds a tremendous supply of the red metal (with the mine thought to have a 100-year life span).

While the exploration phase is not yet complete, ore grades look promising so far.

The company aims to start mining operations at this new location in 2022, with output of 330,000 tons per year expected during the first five years.

The Kamoa-Kakula mine, located in the Democratic Republic of the Congo, may result in as much as 700,000 tons per year  (mining there is slated to start in 2021).

With these new, large resources on the horizon, copper looks set to shift to surplus in the coming years.

As pointed out in this month’s MetalMiner Monthly Outlook for November, the International Copper Study Group (ICSG) expects this year’s deficit of 320,000 tons to shift to a surplus of around 280,000 in 2020.

What This Means for Industrial Buyers

While copper prices increased recently, overall, the uptrend lacked strong momentum.

Industrial buying organizations need to stay alert for a rise in prices, in case mixed growth signals turn solid.

Want an easier solution to tracking industrial metals prices and trade news? Request a demo of the MetalMiner Insights platform.

Buying organizations seeking more insight into longer-term copper price trends may want to read MetalMiner’s Annual Metal Buying Outlook.

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Actual Copper Prices and Trends

Copper prices increased across all index values this month, with Japan’s primary cash price increasing the most (by 4% to $6,148/mt).

The LME primary three-month price increased by 3.7% to $5,850/mt.

Korean copper strip increased by 2.8% to $8.07 per kilogram.

U.S. producer copper grades 110 and 122 increased by 2.4% (both now at $3.42 per pound), while grade 102 increased 2.2% to $3.64 per pound.

China’s copper #2 price increased by 1.6% to $5,457/mt. China’s copper bar price increased by 0.9% to $6,665/mt. China’s primary cash and copper wire prices both increased 0.8%, rising to $6,679/mt and $6,672/mt, respectively.

The Indian copper cash price increased by 0.7% to $6.17 per kilogram.

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This morning in metals news, the United States Trade Representative will soon consider whether to extend tariff exclusions granted last year for imports of certain products from China, the GFG Alliance is aiming to consolidate its steel operations and make the new consolidated entity carbon-neutral by 2030, and LME copper prices continue to make gains this month.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

USTR to Consider Tariff Exclusion Extensions

Last December, the USTR granted tariff exclusions on $34 billion worth of imports from China.

With those exclusions set to expire later this year, the USTR will soon initiate a process to consider whether or not to extend them.

“The United States Trade Representative (USTR) will commence on November 1, 2019 a process for considering extending for up to twelve months certain exclusions from additional tariffs on Chinese imports that were granted last December and are set to expire on December 28, 2019,” the USTR said.

“In a Federal Register notice to be published this week, USTR will provide details on the process for submitting comments favoring or opposing specified tariff exclusions. The period for submitting comments will run from November 1, 2019 to November 30, 2019.”

GFG Alliance Eyes Carbon-Neutral Future

The GFG Alliance, which includes Liberty House steel plants around the world, is aiming to consolidate its steel production into a single global company: the Liberty Steel Group.

“A single global company with 18 million tonnes of rolled steel capacity annually is to be launched through a consolidation of GFG Alliance’s steel businesses, with an ambition to lead the industry towards a carbon-neutral future,” Liberty House announced Tuesday.

“The family-owned alliance led by Sanjeev Gupta today announces that Liberty Steel Group, which altogether employs 30,000 people in 10 countries, will be incorporated by the end of this year through a merger of GFG’s upstream and downstream steel manufacturing, mining and distribution businesses around the world.”

The new group will aim to be carbon-neutral by 2030.

“At the heart of the group’s mission will be an ambition to build on GFG’s existing GREENSTEEL strategy to aim for net carbon neutral status by 2030 – placing Liberty Steel Group on a pathway to become the first carbon neutral steel company in the world,” the company said. “This will include exploration of the best use of new technologies such as hydrogen generated from renewable power to produce steel.”

LME Copper Rises

The LME three-month copper price, after approaching MetalMiner’s short-term support price in early October, has since made incremental gains throughout the month.

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As of Monday, the LME three-month price rose to $5,910/mt, marking a 2.91% month-over-month increase, according to MetalMiner IndX data.

A growing copper supply is not exactly what copper producers wanted to hear, as a new mine with a 100-year life span has been announced.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Prices have been depressed all year, with worries about deteriorating trade and surplus supply weighing on sentiment.

Anglo American’s $5 billion copper project at Quellaveco in Peru could potentially hold enough reserves to supply a century of production, according to company CEO Mark Cutifani, as reported by the Financial Times.

The article reports the extensive ore body has so far only been defined to a depth of 400 meters. However, with ore grades at over 1%, the mine’s economics are solid.

Further drilling will be required to map the full extent, but preliminary sampling suggests mineralization could extend to 1,000 meters, the company says.

Quellaveco is due to start production in 2022. Once it reaches full capacity, it will produce an average 330,000 tons a year of copper in its first five years; in the company’s words, it will be a license to print money, the Financial Times reported.

Two adjacent mines in the same area have been in production for more than four decades at much greater depths than Quellaveco’s current boundaries, suggesting mineralization is far more extensive than current sampling has identified.

Copper demand is widely expected to rise in the coming decade due to the electrification of cars and the expansion of renewable energy. Currently, however, the market is oversupplied, with RC/TC charges at smelters depressed and little to support prices.

A recent upturn has reversed, as Antofagasta averted a labor strike, reaching a labor agreement with the union at its Los Pelambres mine. Prices subsequently resumed their weak showing, as supply fears quickly eased.

Supply from Quellaveco will not hit the market for some years, even assuming Anglo American manages to bring its project to production on time, which is by no means certain. One of its other major projects, its iron ore mine at Minas Rio, was severely delayed and horribly over budget, for example.

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The company has performed better under Cutifani. The timing for Quellaveco to reach full production in the early to mid-part of the next decade may indeed significantly improve the firm’s prospects if, as widely expected, copper prices have recovered by then.

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This morning in metals news, Rio Tinto released its third-quarter production figures, India has proposed an anti-dumping duty on flat-rolled steel from China and other countries, and copper prices dropped after a strike was averted at Chile’s Antofagasta.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Rio Tinto Posts Strong Third Quarter

Miner Rio Tinto posted third-quarter iron ore production of 87.3 million tons, marking a 6% increase on a year-over-year basis and a 10% increase compare with Q2 2019.

Bauxite production increased 9% year over year, while aluminum production fell 3%.

“We have delivered improved production across the majority of our products in the third quarter, with a solid result at our Pilbara mines driving increased sales of iron ore into robust markets,” Rio Tinto CEO J-S Jacques said. “Our strong value over volume approach, coupled with our focus on operational performance and disciplined allocation of capital, will continue to deliver superior returns to shareholders over the short, medium and long term.”

India Proposes Anti-Dumping Duty on Chinese Flat-Rolled Steel

The Indian government Tuesday proposed a new flat-rolled steel anti-dumping duty on imports from China, Vietnam and South Korea, Reuters reported.

The duty, once implemented, will be effective for six months, according to the report.

Copper Drops on Antofagasta News

After Chilean copper miner Antofagasta reached a new 36-month contract with laborers at its Los Pelambres mine, copper prices moved downward, Reuters reported.

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Three-month LME copper dipped 0.2% Wednesday to $5,764 per ton, according to the report.

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This morning in metals news, it was a busy week for U.S. Steel, copper hit a two-week high and miner Rio Tinto signed its first portside iron ore contract in Chinese currency.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

U.S. Steel Looks to the Future

Steelmaker U.S. Steel this week announced CFO Kevin Bradley’s intention to resign effective Nov. 4.

Bradley will be succeeded by Christine Breves, the firm’s senior vice president of manufacturing support and chief supply chain officer.

“Kevin has served U. S. Steel well as CFO, contributing to the transformation of the company, including last week’s announcement of our investment in Big River Steel,” CEO and President David Burritt said. “Kevin’s leadership improved the company’s balance sheet and enabled the company’s transformation to a world competitive ‘best of both’ integrated and mini mill technology company.”

In addition, the company is rolling out a new operating model that will go into effect Jan. 1, 2020, in an attempt to cut costs and boost the company’s technological standing.

“The realignment of U.S. Steel’s leadership team around more nimble and efficient executive functions, notably to sharpen focus on operational and commercial excellence and promote technological innovation, will enable the company to establish a more competitive cost structure with enhanced capabilities to serve priority customers in strategic markets,” the company said.

“Additionally, this enhanced operating model will create a new, differentiated U.S. Steel with a team that is charged with leading the execution of the strategy and increasing profitability. It also will further unlock the value of U. S. Steel’s announced investments in Big River Steel and at Mon Valley Works and Gary Works to drive profitable growth, deliver capital and operational cash improvements, and position U. S. Steel to continue to be an industry leader in delivering high-quality, value-added products.”

Copper Hits Two-Week High

Whether it proves to be founded or not, optimism regarding the potential for a partial trade deal between the U.S. and China has offered support to the copper price.

Top-level negotiators from the two countries met Thursday and Friday, with some hope the countries could agree on at least some concessions.

According to Reuters, LME copper rose 0.4% to $5,805 per ton, buoyed by the optimism coming from this week’s talks.

Rio Tinto Signs Contract in Yuan

Multinational miner Rio Tinto has signed its first portside Chinese iron ore contract using Chinese Renminbi, Reuters reported.

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The contract featured the sale of 10,000 tons of mid-grade iron ore to Chinese company Shanxi Gaoyi Steel Co Ltd, according to Reuters.

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This morning in metals news, the WTO ruled in favor of the U.S. in its ongoing battle with the E.U. over Airbus subsidies, striking workers at General Motors rejected the automaker’s latest offer, a Louisiana steel group has gone bankrupt and copper prices are slumping.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

WTO Rules in U.S.’s Favor

As part of the ongoing saga between the U.S. and E.U., a World Trade Organization (WTO) arbitration panel was set this week to determine the level of countertariff measures the U.S. would be permitted to apply against E.U. goods (in retaliation against the E.U. for its subsidies toward aircraft manufacturer Airbus).

On Wednesday, the panel announced it had ruled in the U.S.’s favor, affording the U.S. the ability to wield $7.5 billion in tariffs on E.U. goods.

A proposed tariff list released earlier this year by the United States Trade Representative included copper alloys, among other items.

Union Rejects GM Offer

A GM offer to end the UAW strike — now in its third week — was sent back by the union because it did not adequately address workers’ demands, according to UAW Director and Vice President Terry Dittes.

“Last night, Monday, September 30, 2019, GM passed a comprehensive proposal at 9:40 pm across the bargaining table,” Dittes said in a prepared statement.

“This proposal that the Company provided to us on day 15 of the strike did not satisfy your contract demands or needs. There were many areas that came up short like health care, wages, temporary employees, skilled trades and job security to name a few. Additionally, concessionary proposals still remain in the company’s proposals as of late last night.”

Bayou Steel Group Files for Bankruptcy

A Louisiana steel group has filed for bankruptcy, nola.com reported, impacting 400 workers at the Bayou Steel Group facility.

According to the report, the company has as much as $100 million in outstanding debts.

The closing comes 40 years after the mill in LaPlace, Louisiana, first opened, according to the report.

Copper Price Falls

LME copper was bid down 0.5% on Wednesday, Reuters reported, down to $5,660 per ton.

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As MetalMiner’s Stuart Burns explained earlier today, copper prices are forecast to decline further in the year ahead.

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Copper prices have been sliding this year, with the average LME cash price in August of $5,707.98/mt down 3.9% from a July average of $5,939.85/mt.

Global copper mine production is also down.

Through the first half of 2019, copper mine production was down 1.4% compared with the first half of 2018, according to a report by the International Copper Study Group (ICSG).

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Solvent production fell 1% during the period, while extraction-electrowinning production fell 3.5%.

The half-year decline was paced by declines in Chile and Indonesia.

Chilean production was down by 2.5% due to lower copper head grades, according to the ICSG. Meanwhile, Indonesian concentrate production plunged 55% as the country transitioned two major mines to new ore zones.

Production in the Democratic Republic of the Congo and Zambia was about flat compared with 1H 2018 levels, while production in No. 2 producer Peru, Australia, China and Mongolia ticked up.

Meanwhile, refined copper production was estimated to have declined 1% in the first half of the year compared with 1H 2018. Production production fell 1.5%, while production from scrap increased 1%.

Chile’s refined output declined by 38% “due to power supply interruptions, smelter outages and the introduction on 1st January 2019 of a 5% custom duty on copper concentrate imports constraining smelter feed.” Meanwhile, the ongoing closure of Vedanta’s Tuticorin smelter — dating back to April 2018 — saw India’s production fall by 33%.

However, output increased in China, Iran, Poland, Brazil and Australia, according to the ICSG.

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Apparent refined usage declined by 1% in 1H 2019. China saw its net refined copper imports decline by 16% during the period, but its usage increased 3% on the back of increased domestic output.

As MetalMiner’s Stuart Burns noted, China’s falling aluminum and copper imports can be attributed in large part to the ongoing trade war with the U.S.; on that front, the two countries are scheduled for principal-level talks in early October (on the heels of last week’s deputy-level talks).

According to the ICSG, copper stocks held at major metal exchanges as of the end of August were up 48% compared with stock levels at the end of December 2018.

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This morning in metals news, members of the United Steelworkers union ratified a new Alcoa labor deal, the European Steel Association (EUROFER) recently released its 2019 European Steel in Figures report and LME copper prices were up Friday.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

USW Ratifies Labor Agreement

The United Steelworkers union has ratified a new labor agreement at Alcoa, which covers 1,700 employees at five Alcoa facilities.

“The Company and the union leadership tentatively agreed on August 30 to the terms of the four-year contract, subject to ratification by the union’s members,” Alcoa said. “The USW announced the outcome of that vote on Thursday, Sept. 19.

“The new agreement, which is now in effect, covers employees represented by the USW at Warrick Operations in Indiana, Massena Operations in New York, Gum Springs in Arkansas, Wenatchee Works in Washington, and Point Comfort in Texas.”

EUROFER Releases European Steel in Figures

EUROFER’s recently released European Steel in Figures painted a “mixed” picture of the European steel landscape.

“On the face of it, the overall performance of the steel market was relatively positive in 2018,” the document states. “Apparent consumption was up 3.3% in 2018 to 164 million tonnes of apparent consumption – though there was a marked loss of momentum compared to 2017.”

However, as evidenced by Europe’s imposition of permanent steel safeguards earlier this year, imports remain a challenge to the European steel sector.

“However, imports have exploded to new highs, and rising domestic demand has been almost entirely absorbed by this foreign supply,” EUROFER said. “Steel-using sectors, such as automotive, are beginning to see reversals – which has an impact on their current and anticipated demand for steel. Apparent consumption is expected to fall by 0.4% in 2019.”

Copper Prices Rise

Copper prices received a boost Friday from positive U.S. housing data, Reuters reported.

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With August home resales at a 17-month high, LME three-month copper ticked up 0.2% as of 1:48 GMT, according to the report, after trending downward in each of the previous four sessions this week.

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This morning in metals news, the Federal Reserve is expected today to cut interest rates once again, the LME copper price dropped ahead of the Fed’s decision and Steel Authority of India Ltd. (SAIL) shares rose Tuesday.

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Federal Reserve Expected to Make Interest Rate Cut

The Federal Reserve is expected to cut interest rates again later today, CNBC reported.

If the cut comes to fruition, it would mark just the second interest rate cut since the Great Recession.

London Copper Falls

Ahead of the Fed’s decision today, copper on the LME dropped, Reuters reported.

LME three-month copper slipped 0.1% to $5,816.50 per ton, Reuters reported, while the most-traded SHFE copper contract dropped 0.2% to 47,310 yuan per ton ($6,673.63 per ton).

SAIL Shares Rise

Shares of Steel Authority of India Ltd. (SAIL) rose on Tuesday to a four-month intraday high, Bloomberg reported.

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The rise came on the heels of the Indian government’s decision to allow the state-run producer to sell 70 million tons of iron ore from its captive mines, according to Bloomberg.

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This morning in metals news, E.U. Trade Commissioner Cecilia Malmstrom wants the U.S. to hold off on imposing tariffs in response to the long-running Airbus-Boeing subsidy saga, iron ore prices could continue to plunge and copper prices dipped again Tuesday.

E.U. Trade Chief Seeks Deal on Aircraft Subsidies

Earlier this year, the United States Trade Representative released a preliminary list of E.U. products worth approximately $11 billion that could be imposed in retaliation against E.U. subsidies of aircraft manufacturer Airbus.

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On Friday, Politico reported the WTO ruled in the U.S.’s favor, giving it the green light to impose billions of dollars of tariffs on E.U. goods, including copper alloys.

“This case has been in litigation for 14 years, and the time has come for action. The Administration is preparing to respond immediately when the WTO issues its finding on the value of U.S. countermeasures,” U.S. Trade Representative Robert Lighthizer said in April. “Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft.  When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”

E.U. Trade Commissioner Cecilia Malmstrom, however, is hoping the U.S. will hold off on imposing the retaliatory tariffs so the two parties can reach an aircraft subsidy deal.

“Our view is that we have enough tariffs in the world as it is… The U.S. president likes to make deals so we have offered to try to make a deal to find a negotiated solution,” Malmstrom was quoted as saying by Reuters.

Iron Ore Could Continue Descent

After surging above $120 per ton this year on supply-side disruption, the price of iron ore has fallen back down to earth, sliding to around $90 per ton.

According to Indian steelmaker JSW Steel, the iron ore price could slide even further, the Business Standard reported.

Seshagiri Rao, joint managing director for JSW Steel, predicted the iron ore price could trade between $80 and $85 per ton for the rest of the year before falling to between $60 and $65 per ton next year.

Copper Slides Again

After falling in the week’s opening session, copper continued to slide Tuesday as the U.S. and China prepare to renew their ongoing trade talks.

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Three-month copper on the LME dropped 1.2% on Tuesday, falling to $5,796 per ton, Reuters reported.