copper price

Chilean copper producer Codelco, the world’s largest, indicated it could see copper prices coming down in 2022.

According to a Reuters report, Codelco CEO Octavio Araneda said prices in 2022 will likely come in slightly lower than in 2021.

As we’ve noted recently, MetalMiner is hosting its final webinar of the year on Wednesday, Dec. 8, during which the MetalMiner team will overview price predictions for metals in 2022. Those interested in participating in the session can sign up on the MetalMiner Events page.

Copper prices stabilize

copper mine

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Like aluminum, LME copper prices on the LME surged to $10,270 per metric ton in late October, according to MetalMiner Insights data.

The price fell back to close the month, however, closing October at $9,490 per metric ton.

Since then, the copper price has trended sideways.

From a technical perspective, LME copper trading volumes reached a November high of 145,635 as of Nov. 2. Volumes fell as low as 69,991 on Nov. 25, during which prices surged briefly and approached MetalMiner resistance levels.

However, the stronger the trading volume, the greater the significance of a corresponding price movement (and vice versa). As such, after jumping to just under $9,900 per metric ton Nov. 25, the price retreated.

LME three-month copper closed the month at $9,510 per metric ton.

Political crossroads

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Global copper mine production increased by 3.3% through the first eight months of the year, the International Copper Study Group reported today.

Meanwhile, copper prices have stabilized somewhat this month after plunging in late October.

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Copper mine production

Global copper concentrate production increased by 5% during the period, the ICSG reported. Furthermore, solvent extraction-electrowinning declined by 4%.

Chile, the world’s top copper producer, saw its output fall 1% during the eight-month period.

Meanwhile, Peru, the second-largest copper producer, saw its output rise by 10% year over year. However, compared with 2019, Peru’s output declined by 8%.

Elsewhere, U.S. output declined by 0.9%, while Indonesian output increased by 57%.

Refined output increases 2.1%

Refined output during the period jumped by 2.1%, the ICSG reported.

China, the top consumer of copper, posted a jump of 5.8% in refined copper production. Refined copper output in Chile declined by 5%.

U.S. refined copper output increased by 11.5%, mainly due to “operational issues” in 2020.

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This morning in metals news: ELYSIS, a joint venture of Alcoa and Rio Tinto, said it is one step closer to the production of carbon-free aluminum; the U.S. trade deficit in September reached $82.9 billion; and, lastly, aluminum and copper prices have leveled off after plunging to close October.

MetalMiner has launched a full suite of precious metals as part of the MetalMiner Insights platform. This includes a complete suite of catalytic converter precious metals, which are particularly useful for automotive end-use applications.

ELYSIS touts progress toward carbon-free aluminum

carbon footprint

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ELYSIS, a joint venture of Alcoa and Rio Tinto, said it is one step closer to the production of carbon-free aluminum.

The firm announced it produced aluminum “without any direct greenhouse emissions” at its Industrial Research and Development Center in Saguenay (QC), Canada.

“The production of aluminium at the ELYSIS Industrial Research and Development Center marks the achievement of a significant milestone, using a full industrial design at a size comparable to small smelting cells operating in the industry today,” ELYSIS said.

Furthermore, ELYSIS aims to scale up the technology in 2023 before installation in 2024 and eventual carbon-free aluminum production in 2026.

U.S. trade deficit hits $80.9B in September

The U.S. trade deficit reached $80.9 billion in September, up by 11.2% from the previous month, the Bureau of Economic Analysis reported.

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Although not accounting for more recent supply concerns, global copper mine production increased by 3.6% through the first seven months of the year, the International Copper Study Group reported.

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Global copper production rises through seven months

copper mine in Peru

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Copper concentrate production increased by 5.5% during the seven-month period. Meanwhile, solvent extraction-electrowinning declined by 4.3%.

Chile, the top copper producer, saw its output fall by 1% during the period. However, Peru, the second-largest copper producer, saw its output rise by 11%.

Elsewhere, Indonesia’s output rose by 61%.

Refined copper production rose by 2.6% during the period. Electrolytic production rose by 1.8% and secondary production from scrap increased by 7%.

Copper supply fears

However, more recently, the copper supply picture has not been as rosy.

As Stuart Burns outlined earlier this week, the copper market is showing signs of duress.

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This morning in metals news: copper prices have surged this month; median weekly earnings for full-time wage and salary workers are up; and WTI crude oil prices have ticked up since last week.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Copper price surge

copper smelter

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Earlier today, MetalMiner’s Stuart Burns delved into copper market stresses, including short-term (at the very least) supply concerns.

“Mine supply is likely to improve, if not this year, then gradually in 2022,” Burns explained. “But that may fail to work through into lower refined copper prices if capacity bottlenecks in China are not resolved this winter. Indeed, the greater ore supply could result in higher treatment charges as refiners find they have the whip hand in a plentiful ore supply market but constrained refining capacity environment.

“In the short term, there appears more risk to the upside than the down.”

After trending mostly sideways for a few months, copper has awoken this month.

LME three-month copper closed last week at $10,275 per metric ton, up by 8.65% month over month. The price is now back to its highest level since May.

Median weekly earnings up 0.7% year over year

Median weekly earnings for full-time wage and salary workers reached $1,001 in Q3 2021, the Bureau of Labor Statistics reported.

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There doesn’t appear to be a lot of consensus around the copper market.

On the one hand, according to Reuters, the International Copper Study Group (ICSG) reports the global refined copper market will be roughly balanced between supply and demand this year. Meanwhile, the group forecasts a significant supply surplus in 2022.

The ICSG is predicting a small deficit of 42,000 tons this year. As for next year, it predicts a wave of new mine supply will push the market into a surplus of 328,000 tons.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Copper price picture

copper mine

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But Goldman Sachs is suggesting otherwise.

It says mine supply is likely to underperform, be late and, most importantly, a wave of refining disruption in China due to power problems is going to restrict supply and drive prices higher.

Just last week Goldman predicted $10,500 per ton, only for the spot price to break though it shortly thereafter.

The difference between the price for spot or prompt metal and that for delivery in three months on the LME has hit a record $350 per ton, according to the Financial Times.

In short, it is displaying all the hallmarks of a market under extreme duress.

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The Copper Monthly Metals Index (MMI) fell 1.7%, as the copper demand picture could be set to weaken and the LME three-month and China primary cash prices fell month over month.

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The Fed effect and Congress delays

As the Federal Reserve prepares to scale down its pandemic strategy, copper prices dropped. The Fed reported it would hike rates and pare back the asset purchase program (i.e., quantitative easing).

This news benefited the U.S. dollar, which increased over the past month. This is particularly important to copper. The U.S. dollar and commodities have historically moved in a perfect inverse relationship.

Moreover, Congress’ decisions — or lack of them — could cause market turmoil and impact copper prices. The bipartisan infrastructure deal remains delayed in the House of Representatives.  Congress has not taken action on increasing the debt ceiling, adding to the potential market turmoil, though it does appear that Republicans have agreed to a short-term debt ceiling cover into December.

China looming over prices

Meanwhile, the second-largest economy in the world continues to show signs of volatility.

China is the biggest consumer and producer of refined copper. Its latest issue involves a power crisis that has impacted both copper production and also manufacturing. Both have experienced restrictions.

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The Copper Monthly Metals Index (MMI) decreased by 3.4% in August, as forms of the metal included in the index dropped (with the exception of Chinese copper scrap).

September 2021 Copper MMI chart

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Copper prices trend downward

Similarly to the index, LME copper prices dropped by 3.3%. LME trading volumes spiked as the price declined from Aug. 16-19. This sell-off signaled a strong negative trend.

Since then, prices recovered. However, trading volumes remained muted, reinforcing the negative market sentiment.

SHFE prices behaved similarly to LME prices. Meanwhile, the volatility of the dips did not appear as strong. The SHFE’s heaviest trading volumes occurred toward the end of the month, when prices jumped, thus signaling a strong positive indicator.

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This morning in metals news: Hurricane Ida made landfall in Louisiana on Sunday; copper prices have bounced back in the final third of August; and, lastly, Alro Steel has acquired metal distributor and service center Metal Stock.

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Hurricane Ida hits Louisiana

hurricane image

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Hurricane Ida barreled down on the Gulf Coast over the weekend, making landfall in Louisiana on Sunday.

On Friday, the Energy Information Administration summarized the potential energy impacts of the Category 4 storm.

“Typically, demand for transportation fuels increases rapidly in the days before the arrival of a hurricane in the affected areas as consumers purchase fuel to prepare for evacuation,” the EIA noted. “This rapid, unexpected increase in demand puts pressure on local inventories because the rest of the supply chain has not had time to respond. Louisiana has declared a state of emergency ahead of Hurricane Ida’s landfall.”

The EIA maintains a mapping system that displays energy disruptions in locations with active storms.

Furthermore, in terms of trade, the Port of New Orleans is the fourth-largest port in the U.S. The port authorities said New Orleans Terminal and Ports America for containerized operations would be closed Monday, Aug. 30.

Copper bounces back

Despite supply concerns at mines around the world, particularly in South America, the copper price lost steam in the first half of August.

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While copper mine supply concerns have cropped up of late — as MetalMiner’s Stuart Burns explained recently — output during the first five months of the year rose by 4.8%, the International Copper Study Group reported Friday.

Receive the latest short-term and long-term outlook for the full range of industrial metals (base and ferrous) at the annual MetalMiner Forecasting Workshop on Aug. 25

Copper mine production

copper mine

Gary Whitton/Adobe Stock

Global copper mine production rose by 4.8% during the first five months of the year, including a 6.5% rise in concentrate production and a 2% decline in solvent extraction-electrowinning.

No. 1 copper producer Chile saw its output drop by 2% in the five-month period. Chilean concentrate production rose by 2%, while extraction-electrowinning fell 13%.

Meanwhile, Peru, the No. 2 copper producer, saw its output rise by 17% year over year. However, Peru’s copper mine production fell by 7% compared with the equivalent five-month period in 2019.

Elsewhere, Indonesia’s copper mine production surged by 72%, mainly due to ramp-up at the Grasberg mine.

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