copper price

Global copper mine production dipped last year compared with 2018, according to the most recently monthly data from the International Copper Study Group (ICSG).

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Copper concentrate production declined 0.6% and solvent-extraction electrowinning fell by around 1%, the ICSG reported.

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The Copper Monthly Metals Index (MMI) held at a value of 70 this month based on a mix of mild price changes globally.

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LME copper prices traded sideways during most of February, following late January’s precipitous price drop. However, the price weakened again in early March.

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This morning in metals news, arbitration fell in favor of the Department of Justice vis-a-vis the proposed merger of Novelis and Aleris, January steel shipments rose 5.6%, and copper made gains off of multiyear lows.

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According to the International Copper Study Group, the global copper market was in deficit by approximately 385,000 tons through the first 11 months of 2019.

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The LME three-month copper price built some upward momentum in late 2019 and the first two weeks of 2020, rising to just over $6,300/mt as of mid-January.

Since then, however, LME copper has fallen 9.5% — down to $5,727/mt — amid growing fears regarding the coronavirus outbreak in China and reports of a growing number of cases around the world, including in South Korea, Italy and Iran.

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The Copper Monthly Metals Index (MMI) dropped six points this month to 70, a new long-term low, although close in value to October 2019’s reading of 71.

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LME copper prices rallied as January progressed then dropped precipitously later in the month due to demand uncertainty stemming from the coronavirus outbreak in China.

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Before we head into the weekend, let’s take a look at the week that was and some of the metals storylines here on MetalMiner, including coverage of: copper prices and the coronavirus’ impact; European steel consumption; Jingye’s British Steel takeover bid; U.S. steel production; automotive sales and more.

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This morning in metals news, China will slash tariffs it had imposed on a number of U.S. imports, copper’s slide continues and stainless steel manufacturer Outokumpu reported a stainless steel deliveries last year.

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As my colleague, Fouad Egbaria reported earlier this week, copper prices have been on a slide.

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Reuters also reported this week that copper on the LME traded down 0.1% at $5,634 a ton in official rings today as sentiment slides for a quick recovery in top copper consumer China.

Copper is widely seen as a gauge of economic health, particularly in China, because of the dominant position it holds as both producer and consumer. Prices had dropped as low as $5,565.50, its weakest since early September and down 12% since Jan. 16, the article reports.

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This morning in metals news, BHP released its half-year production results, the GFG Alliance unveiled a new aluminum group and copper prices have been on the rise early this year.

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BHP’s copper production rises 7%

Miner BHP released its production results for the half year ending Dec. 31, 2019, showing its copper production ticked up 7% on a year-over-year basis.

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The Copper Monthly Metals Index (MMI) increased by three points this month to 76, the highest value seen since hitting 78 in May. Individual price increases in the Copper MMI basket fell in the range of roughly 1-6%.

LME copper prices managed to regain the $6,200 level but proceeded to move sideways from there due to a lack of further indications regarding a pickup in demand.

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

From a longer-term perspective, copper prices do not appear particularly strong, but they have not dropped all the way back to 2016 price levels — indicating some level of supply dynamics is still at work and supporting prices.

Source: MetalMiner analysis of FastMarkets

Overall, recent weekly trading volumes looked positive overall but muted from a volume perspective, indicating limited support at this time for the recent uptrend (reflected in the sideways turn in the second half of December).

SHFE copper prices finally break six-month sideways trading band

Like LME prices, SHFE copper prices broke out of a short-term sideways trading band that formed in June and are now trading higher.

Source: MetalMiner analysis of FastMarkets

Breaking the next critical resistance level of CNY 50,000/mt will provide a clearer signal that higher prices will hold throughout Q1 2020.

Source: MetalMiner analysis of FastMarkets

Positive reports regarding a pickup in manufacturing demand late in the year supported prices.

Additionally, recent government measures — particularly monetary easing — appeared to support construction demand, a positive development for copper prices.

Demand for copper, a critical industrial, automotive, and construction metal, will remain high.

Current prices remain supported from a long-term perspective, even in the weaker demand environment seen since last year.

Source: U.S. FRED

Chinese construction demand corresponded with noticeable price increases beginning in 2004. That was followed by a drastic decline in prices and trading volumes in 2008-2009, corresponding to the timing of the global recession, which stalled out property growth in China.

While copper presently trades with lower volumes than during the peak years of China’s construction activity, overall copper trading volumes remain higher than during past decades. Baseline demand should continue to support the somewhat higher copper price level. Falling mining output also matters but may exert less immediate impact on prices.

Looking at the long-term chart of price values provides some sense of the metal’s price downside,  upside risk and potential volatility.

Assuming that supply moves toward surplus, as projected for the year by the International Copper Study Group (ICSG) according to its October annual forecast for 2020, it may be difficult for copper prices to increase this year unless demand improves, despite the long-term downtrend in mine supply.

What this means for industrial buyers

Copper prices increased but then stalled out and have not yet regained momentum.

With prices already somewhat higher, industrial buying organizations will need to watch the prices carefully from here for further increases.

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Buying organizations seeking more monthly insight into copper price trends can learn more about our MetalMiner Monthly Buying Outlook.

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Actual copper prices and trends

Copper prices increased across the board this month, with the LME primary three-month price showing the largest gain at 5.8%, to $6,215/mt. Japan’s primary cash price increased by 5.4% to $6,421/mt.

China’s primary cash and copper wire prices both increased by 4.6%, up to $7,045/mt and $7,040/mt, respectively. China’s copper bar price increased by 4.5% to $7,034/mt. China’s copper #2 scrap price increased by 1.0% — the weakest increase in the index this month — to $5,514/mt.

U.S. producer copper grade 110 and grade 122 increased by 4.3%, both now at $3.62 per pound. U.S. producer copper grade 102 increased by 4.1% to $3.84 per pound.

Korean copper strip increased by 2.8% to $8.14 per kilogram.

The Indian copper cash price increased by 2.3% to $6.20 per kilogram.