copper price

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The Copper Monthly Metals Index (MMI) dropped three points in August down to 71, with all prices in the index losing value.

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LME copper prices traded lower in August following the precipitous price drop early in the month.

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

The price dropped again in early September to new lows for 2019, prior to moving back to the $5,800/mt price level during the past week.

SHFE Prices Trade Sideways

Source: MetalMiner analysis of FastMarkets

Since June, SHFE prices have traded in a narrow band in the CNY 46,000/mt to CNY 48,000/mt price range, indicating a lack of demand recovery.

Global Demand Still Looks Weak

Demand concerns continue to weigh on copper prices. Meanwhile, trade issues also continue to impact the metal’s price volatility.

Demand in China, the world’s largest copper consumer, still looks weak as the government continues to implement measures to bolster the economy.

The China Association of Automobile Manufacturers (CAM) released poor automotive sales numbers for August. Like copper, the automotive industry may serve as a good barometer of consumer demand, given its overall weight in total consumer spending.

Total sales dropped by 6.9% in August compared to July. Further, the organization warned the sales outlook looks weak, Reuters reported. Refined copper cathode production dropped by 0.5% compared with July, according to the same report.

What This Means for Industrial Buyers

In last month’s Copper MMI, we provided a list of copper products included on the list to be impacted by the U.S. implementation of 301 WTO tariffs of up to 100% on imports from Europe. As a result of these proposed tariffs, copper product imports, as well as domestically produced copper semis, may face serious price increases.

As of now, copper appears to remain on that list. Industrial buyers will want to continue to track developments in the case.

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Buying organizations seeking more insight into longer-term steel price trends should read MetalMiner’s Annual Metal Buying Outlook.

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Actual Copper Prices and Trends
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Copper prices dropped more significantly this month, with all prices showing declines.

The LME primary three-month price dropped by 5.3% to $5,637/mt.

Korean copper strip dropped by 4.7% to $7.79/kilogram.

Chinese prices decreased by more than 4%. China’s copper wire price dropped most, by 4.7%, to $6,484/mt. The primary cash and copper bar prices dropped by 4.3% to $6,488/mt and $6,479/mt, respectively.

The Indian copper cash price dropped by 4.4% to $6.14/kilogram.

U.S. prices in the index decreased more mildly. U.S. producer copper grade 110 and grade 122 decreased by 2.6% to $3.34/pound for both grades, while grade 102 dropped by 1.7% to $3.56/pound.

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This morning in metals news, Bank Of America cut its steel price forecast, copper prices dropped and gold lost some of its safe haven luster.

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Gloomy Steel Forecast

Bank of America has cut its steel price forecast and is less than optimistic about steel stocks going forward, Yahoo Finance reported.

According to the report, Bank of America analyst Timna Tanners cut her U.S. HRC price target for the second half of the year from $628 per short ton to $572 per short ton.

Tanners also cut 2019 EPS cuts for U.S. Steel, Nucor, Reliance Steel and Aluminum, Steel Dynamics and Commercial Metals Company, according to Yahoo.

Copper Price Drops

Markets continue to fluctuate on a daily basis based on any sliver of news emerging from the ongoing U.S.-China trade war.

On Friday, despite China’s intention to increase bank lending, LME copper was bid down 0.6% to $5,812 per ton, according to Reuters, after reaching a two-year low earlier this week.

Not so Golden

The gold price posted its largest daily dollar loss in three years, MarketWatch reported, on optimism regarding trade and jobs data impacting its safe haven appeal.

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According to the report, gold on the COMEX for December delivery slipped 2.2% to a two-week low of $1,525.50 per ounce.

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This morning in metals news, the copper price ticked up Wednesday, an appeals court is reconsidering an aluminum antitrust suit involving several big-name companies and Rio Tinto is taking over a mining site in British Columbia.

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Copper Price Rises

The copper price picked up Wednesday on optimism stemming from the Chinese government’s stimulus measures, Reuters reported.

LME copper moved up 0.2% while the most-traded ShFE copper contract jumped 0.5%.

Aluminum Antitrust Appeal Moves Forward

An antitrust case involving Goldman Sachs, JPMorgan Chase and miner Glencore has been revived by a U.S. appeals court, Reuters reported.

According to the appeal from aluminum purchasers, the companies allegedly conspired to drive up aluminum prices by reducing supply.

Rio Tinto Agrees to Buy BC Mine

Miner Rio Tinto has agreed to take a 100% stake in Triumph Gold’s Andalusite Peak mine property in British Columbia, Mining Weekly reported.

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According to the report, the property was first staked by Triumph Gold in January 2017; high grade copper, gold and silver mineralization was identified on the site.

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This morning in metals news, the latest round of U.S.-China trade talks wrapped up Wednesday, steel companies are not reducing emissions fast enough and analysts cut their copper forecast for fourth-quarter prices.

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U.S., China Conclude Talks in Shanghai

Trade negotiators from the U.S. and China wrapped up yet another round of trade talks this week in Shanghai.

In a statement, China’s Ministry of Commerce described the talks as a “constructive and deep exchange on major trade and economic issues of mutual interest,” Reuters reported.

According to the report, the Ministry of Commerce also said the two sides agreed to meet again in September.

Steel Industry and Carbon Regulations

As the global focus on climate change intensifies, steel companies are not reducing their emissions quickly enough, according to a new report by CDP cited by CNBC.

According to the report, steel companies are not doing enough to avoid a rise of 2 degrees Celsius, a fact that could have an impact on their bottom lines.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

In Europe, for example, the carbon price has tripled since last year, according to the report.

Copper Price Forecast

Analysts polled by Reuters were bearish on the copper price this year, recently forecasting an average fourth-quarter LME price of $6,291 per ton.

The fourth-quarter price forecast for copper marked a 5.4% decline from a previous forecast in May.

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This morning in metals news, June steel imports in the U.S. declined, U.S.-China trade talks are expected to resume after falling apart in May and copper prices picked up Wednesday.

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June Steel Imports Hit 1.8M Tons

June steel imports in the U.S. fell to 1.8 million metric tons, down from 1.9 million metric tons in May, the U.S. Census Bureau reported Wednesday.

U.S. imports from Korea and Brazil fell, while increases occurred from Canada, Russia and Germany, according to the Census Bureau report. (In May, the Trump administration removed its Section 232 steel and aluminum tariffs vis-a-vis Canada and Mexico.)

U.S.-China Talks Set to Resume

The U.S. and China’s long-running trade talks fell apart in May, but they appear to be set to pick back up next week.

U.S. trade negotiators will head to Beijing for the next round of talks sometime in the next week, CNBC reported.

Talks fell apart in May, as the U.S. accused China of reneging on previous commitments; ultimately, President Donald Trump increased tariffs on a previously announced $200 billion list of Chinese goods.

Copper Prices Rise

News of the resumption of trade talks between the world’s two largest economies spurred upward movement in the copper price.

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LME copper picked up 0.5% to reach $6,000 per ton, Reuters reported.

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The Copper Monthly Metals Index (MMI) rebounded to 74 following last month’s fairly sizable drop from 78 to 73 (hitting a 2019 index  low).

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LME copper prices dropped by nearly $100/mt around the first of July after gaining strength in June, then traded sideways during the first week of the month.

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

Meanwhile, LME warehouse stocks increased.

Source: MetalMiner analysis of FastMarkets

However, copper mining disruptions continue to impact mine output. According to Reuters, Chile’s exports of copper declined by 14% in June compared with June of 2018, coming on the heels of extremely rainy weather early in 2019. Additionally, falling ore grades continue to hurt Chilean mining production.

The Congo army recently evicted illegal miners working at Kamoto Copper Company (KCC), a Glencore subsidiary in the Kolwezi area. According to the company, around 2,000 illegal, small-scale miners intruded illegally daily, on average. The move followed a landslide that killed 43 people at the KCC concession.

Zambia announced plans for a law that will compel miners to procure locally, according to the country’s mine minister, as reported by Reuters. Zambia continues to take a greater role in the mining sector. Zambia ranks second in Africa in copper export volume, with the metal dominating the country’s exports.

Chinese Copper Scrap vs. LME Copper

The price gap between Chinese copper scrap and LME copper narrowed last month considerably due to the steep LME price drop. This month, however, the slight LME price increase exceeded the slight increase in Chinese copper scrap prices.

Notably, China’s refined copper output in May dropped by 5.2% compared with May 2018. Output totaled 711,000 tons, marking a 3.9% decrease compared with the previous month.

The recent crackdown on scrap imports has likely caused the production decline. Further restrictions impacting high-grade copper scrap came down in early July as the Chinese government continues to ramp up its crackdown on scrap.

Given that scrap imports fueled about 10% of production last year, producers need to find alternative sources of raw material. According to China Minmetals Corporation in press reports, copper imports made by the company from a preferred Chilean trading partner look set to increase this year to a value of $900 million.

What This Means for Industrial Buyers

With copper prices showing some strength in June, industrial buying organizations will need to pay careful attention to macroeconomic growth, which could continue to support prices.

It’s important for buying organizations to understand how to react to copper price movements. The MetalMiner Monthly Metal Buying Outlook helps buyers understand the copper marketplace.

Actual Copper Prices and Trends

Copper prices strengthened this month across the index with the exception of Korean copper strip, which dropped 0.4% to $8.29 per kilogram.

The Indian copper cash price increased by 10.9%, the largest increase in the index this month, to $6.53 per kilogram.

Chinese prices turned around this month, as all of the Chinese prices in the index increased. China’s primary cash price and copper wire price increased by 2.7% to $6,898/mt and $6,892/mt, respectively. Copper bar increased 2.8% to $6,885/mt.

Chinese scrap copper #2 increased by 0.6% to $5,592/mt.

U.S. prices in the index all increased by 1.7%. U.S. copper producer copper grade 110 increased to $3.49 per pound, grade 102 priced at $3.68 per pound and grade 122 at $3.49 per pound.

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The Japanese primary cash price increased by 2.1% to $6,163/mt. The LME primary 3-month increased by 2.8%, up to $5,982/mt.

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This morning in metals news, the copper price didn’t budge Thursday ahead of a key meeting between U.S. President Donald Trump and Chinese President Xi Jinping, Nucor announced a price hike for flat-rolled steel products, and automaker Tesla won a tariff exemption on aluminum imported from Japan.

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Copper Price Holds Flat

Markets are anxiously awaiting the results of a key meeting between U.S. President Donald Trump and Chinese President Xi Jinping during the G20 Summit in Japan this weekend.

On Thursday, however, the copper price held flat.

The LME three-month copper price ticked up 0.1% Thursday after soaring to a five-week high during the previous session, Reuters reported.

Nucor Raises Flat-Rolled Steel Prices

Steelmaker Nucor announced its first price hike on flat-rolled steel since February, according to Yahoo! Finance.

The price hikes apply to HRC, CRC and HDG, according to the report.

Tesla Wins Aluminum Tariff Exemption

Electric car maker Tesla secured a tariff exemption for aluminum it imports from Japan, Reuters reported.

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The automaker sought the exemption for the aluminum — which it uses for the production of battery cells at its Nevada Gigafactory — at an annual rate of 10,000 tons, according to the report.

Copper appears to be caught in the crosswinds.

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After months of steady declines from a peak of U.S. $6,600 per ton in April, the copper price had drifted down to well below $6,000 per ton on fears of what impact the ongoing trade war between the U.S. and China would have on top consumer China.

But while trade war tensions continue to provide significant headwinds, an extending strike at Codelco’s Chuquicamata copper mine is raising concerns about supply.

The copper market is considered to be in deficit, according to Reuters, saying the global refined copper market showed a deficit of 51,000 metric tons in March, compared with a 72,000-ton surplus in February. Bloomberg cited the International Copper Study Group, which forecast a deficit of 189,000 tons by the end of this year.

Codelco’s strike has been rumbling on for 12 days now. Chuquicamata is the company’s third-largest mine, producing 321,000 metric tons last year (so over 10,000 tons have been lost so far).

Some 3,200 workers at the mine are represented by three unions. Their grievance is focused on comparable terms of employment between retiring older workers and incoming new workers. The company is holding back on the more generous terms older workers enjoy as they negotiate the severance of some 1,700 workers due to the transition from open pit to underground mine in the next 12 months.

So far, Codelco says it has made the best offer it can.

Workers, however, are not satisfied.

Negotiations are at an impasse. The union is going back to the workers later this week for an extension to the strike. In and of itself, the loss of Chuquicamata’s production is not critical for the copper market, but it heightens concerns about where supply is going to come from, as investment in new mines has been depressed for some years by excess supply and low prices.

Perversely, though, inventory has been rising.

Both the LME and SHFE have seen increases in stocks this year, although they have fallen somewhat in the last month or so. Generally, inventory levels do not suggest a market in crisis.

So, what can we make of the recent price rises: are they purely a reaction to the Chuquicamata strike and a weaker dollar boost to commodity prices, or the buildup for a move higher?

Demand, while less robust than previous years, remains fairly solid. Much of the negativity is down to fears over the trade conflict between the U.S. and China, as is the case with much of the commodity and equity markets; a resolution to that squabble would see a return of optimism and higher prices.

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Without it, though, it is hard to see significant upside to copper this year — the fundamentals are not supporting that yet. In the meantime, sentiment is king.

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This morning in metals news, Rio Tinto downgraded its 2019 iron ore guidance, India is looking to combat Chinese steel imports with higher duties, and the copper price lost some gains late this week on the back of U.S.-Iran tensions and ahead of the G20 Summit in Japan.

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Rio Tinto Downgrades Iron Ore Guidance

Due to operational challenges, Rio Tinto this week announced it has downgraded its 2019 iron ore guidance down to between 320 million and 330 million tons (from between 333 million and 343 million tons).

“Rio Tinto Iron Ore is currently experiencing mine operational challenges, particularly in the Greater Brockman hub in the Pilbara,” the firm said. “This is resulting in a higher proportion of certain lower grade products, partly to protect the quality of our flagship Pilbara Blend.

“Around 1.5 million tonnes of these products were sold in the first quarter, as noted in the 2019 Quarterly Operations Review, 16 April 2019. Additional sales of these products will be made during 2019.”

Indian Steel Ministry Eyes Higher Steel Duties

The Indian steel ministry is targeting a duty increase on imports of finished steel products, Reuters reported, up to 15% from a range of between 7.5% to 12.5%.

According to the report, the Indian steel ministry cited concerns related to the U.S.-China trade war and resulting diverted supplies of steel away from the U.S. market.

Copper Price Falls

After making gains earlier in the week, the copper price slipped on account of tensions between the U.S. and Iran, Reuters reported.

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Three-month LME copper fell 0.4% to $5,592 on Friday after hitting its highest level since May 21 on Thursday, according to the report.

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This month’s Copper Monthly Metals Index (MMI) reading for copper dropped to 73 from last month’s reading of 78, the new low for the year.

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LME copper prices continued to trend downward, but technically still remain in a long-term bull market.

In the shorter term, daily chart prices recently came close to dropping back to start-of-the-year lows.

Source: MetalMiner analysis of FastMarkets

On the other hand, the longer-term outlook indicates hints at some upward momentum still, given that pricing bottoms have continued to move progressively higher since 2016.

Source: MetalMiner analysis of FastMarkets

In the second part of 2018, price momentum shifted downward, but support levels held at higher levels than during the 2017 period when copper prices traded around $5,600/mt. Prices remain at a critical point.

Chinese Copper Scrap vs. LME Copper

The price gap between Chinese copper scrap and LME copper narrowed recently due to the steeper LME price drop.

According to press reports, copper smelter treatment charges dropped to a 6 1/2-year low in China. China continues to add capacity, with projected growth of 1 million tons expected for 2019. The increase in supply suppresses treatment charges (TCs) for copper.

Global Copper Supply Deficit Forecast for 2019

The International Copper Study Group (ICSG) recently forecast a copper metal deficit of 190,000/mt in 2019. However, according to a recent Reuters report, the projected forecast refined metal deficit totals 270,000 mt due to ongoing supply issues in Peru and Zambia, with concentrates looking tight. Supply disruptions could total around 1,200,000 mt, or around 5% of typical supply levels.

Industrial metals respond to global economic conditions, given that players tend to be large international entities that trade extensively cross-border.

Therefore, we can generally expect copper prices to respond to macroeconomic factors like the dollar and global GDP growth rates; even a small percentage change in global growth rates can impact the price of copper.

According to a recent presentation by global miner Rio Tinto, macro headwinds have impacted demand this year.

For the longer term, expectations remain positive, with the company projecting global annual growth to average 3.5% over the next 10 years. Ninety percent of Rio Tinto’s total mining output across metals moves cross-border.

What This Means for Industrial Buyers

With macroeconomic uncertainty at hand, industrial buying organizations should watch the copper market carefully for shifting momentum.

It’s important for buying organizations to understand how to react to copper price movements. The MetalMiner Monthly Outlook report helps buyers understand the copper marketplace.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Actual Copper Prices and Trends

Copper prices showed weakness globally this month.

The Japanese primary cash price dropped by 10% to $6,035/mt. The LME primary 3-month dropped by 9.6%, with the price falling to $5,820/mt. India’s copper cash price dropped 8.3% to $5.89/kilogram.

Chinese prices also dropped steeply, with all the Chinese prices in the index down by 7.6%. China’s primary cash price dropped to $6,717/mt.

Chinese scrap copper #2 decreased by 2.4% to $5,560/mt. Korean copper strip declined by 0.4% to $8.32/kilogram.

U.S. prices dropped in the 6-7% range. U.S. copper grade 110 dropped to $3.43/pound, down from $3.87/pound last month, marking the third straight month of price declines.