copper price

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This morning in metals news, the U.S. steel sector posted a capacity utilization rate of 82.0% to start the new year, copper prices made gains Tuesday and the Port Talbot steelworks’ losses continue to trouble Tata Steel.

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This morning in metals news, the price of copper has surged to an eight-month high, Nucor earlier this month announced a new coil paint line and iron ore prices were also up on the final Friday of 2019.

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Copper prices rise

On this final Friday of the year, copper prices are up to their highest level in eight months, Reuters reported.

According to the report, LME three-month copper jumped 0.7% to $6,256 per ton.

Nucor to add new Arkansas coil paint line

Earlier this month, Nucor Corporation announced it would be adding a new coil paint line at its sheet mill in Mississippi County, Arkansas.

According to the company, the new line is expected to come onstream as of the first half of 2022 and will have a capacity of 250,000 tons per year.

Nucor’s Arkansas facility produced hot-rolled sheet steel for a wide range of applications, including automotive, appliances and construction, among others.

Iron ore up on China’s lifting of anti-smog alert

According to another Reuters report, iron ore futures received a boost when China’s top steelmaking city, Tangshan, lifted anti-smog measures.

The lifting of the measures is expected to lead to increased demand for the steelmaking raw material iron ore.

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

The most-traded iron ore contract on the Dalian Commodity Exchange jumped 1.2% to 642.50 yuan per ton ($91.83), according to Reuters.

According to the most recently data from the International Copper Study Group (ICSG), global copper mine production dropped 0.4% during the first nine months of the year (compared with the same period in 2018).

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Copper concentrate production was unchanged during the period, while solvent extraction-electrowinning dipped 0.4%.

No. 1 copper producer Chile saw its output fall 0.3% due to “lower copper head grades and some production disruptions that occurred early in the year,” according to the ICSG. Anti-government protests in the country have now continued for two months, first sparked by anger over proposed metro fare hikes before spreading to convey larger-scale grievances.

Indonesia’s output fell 50%, while the combined output of the Democratic Republic of the Congo and Zambia declined 3%.

Production in Australia, China, Mexico, Peru and the U.S. increased.

Refined production flat

Meanwhile, refined production through the first nine months of the year was flat compared with last year, the ICSG reported.

Primary production declined 0.4%, while secondary production from scrap increased 1.6%.

Chile’s electrolytic refined output fell 30%, while the country’s total refined production dropped 11%.

Elsewhere, Zambian output fell 35%, while Indian production dropped 22%.

Apparent usage ticks up slightly

Global apparent copper usage increased 0.3% over the first nine months of 2019 compared with the same period in 2018.

China, the world’s top copper consumer, saw its usage rise 2.8%, despite a 12% decline in copper imports.

Global usage ex-China, however, fell 2%, according to the ICSG.

Copper prices show recovery

Copper prices slumped during the second and third quarters of this year but have showed signs of bouncing back in November and December.

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

The average LME cash price for November ($5,859.69/mt) increased 2% compared with the October average price ($5,742.89/mt).

As for stock levels, stocks as of the end of November at the LME, SHFE and COMEX totaled 365,092 tons, up 4% compared with stock levels at the end of December 2018.

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This morning in metals news: copper prices surged to their highest level in seven months; the acquisition of British Steel is progressing, according to prospective Chinese buyer Jingye; and USTR Robert Lighthizer communicated with Mexico regarding USMCA implementation.

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Copper prices rise

Copper prices jumped to a seven-month high Tuesday, a rise powered by concerns over supply, Reuters reported.

The LME copper price reached as high as $6,223/mt Tuesday, according to Reuters, before falling below $6,200/mt as of 1500 GMT.

British Steel takeover process continues

After talks with an arm of Turkey’s military pension fund fizzled earlier this year, China’s Jingye emerged as the favorite to take over the ailing British Steel.

British Steel was put into forced liquidation in May, raising the specter of thousands of potential job losses across the supply chain.

The BBC reported Jingye has pushed back against a report in the Sunday Telegraph — which said the deal was in danger — stating that its takeover bid is making progress toward necessary approvals for the acquisition.

Lighthizer to Mexico: USMCA is ‘great agreement’ for U.S., Mexico

With the White House and House Democrats recently reaching a deal on revisions to the United States-Mexico-Canada Agreement (USMCA), USTR Robert Lighthizer addressed Mexico’s concerns regarding a labor provision in the revised deal.

Lighthizer responded to a letter sent by Jesús Seade Kuri, Mexico’s under secretary for North American and chief trade negotiator for North America, drawing attention to the USMCA provision calling for up to five Department of Labor attachés “to work with their Mexican counterparts, workers, and civil society groups on implementation of the Mexican labor reform, including by providing technical assistance and disbursing capacity building funds, and provide assistance to the new U.S. government interagency labor committee.”

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“These personnel will not be ‘labor inspectors’ and will abide by all relevant Mexican laws,” Lighthizer wrote.

“As you know, the USMCA’s first-of-its-kind, facility-specific, rapid-response mechanism allows an independent, three-person panel chosen by both Parties to request on-site verifications in any of our three countries when there are good faith questions about whether workers at a particular facility are being denied key labor rights. But those verifications will be conducted by the independent panelists not by the labor attachés.

“USMCA is a great agreement for the United States and Mexico. I look forward to working with you and your colleagues to ensure that the agreement enters into force as quickly as possible.”

The Copper Monthly Metals Index (MMI) held at last month’s value of 73 based on November price data. 

LME copper prices took a sideways turn during November as uncertainty over the strength of the global economy continued to constrain copper prices.

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

The price continued to trade below $6,000/mt throughout November, averaging a value of $5,877/mt for the month.

SHFE copper prices continued firmly sideways

SHFE copper prices continued to move sideways once again in November, with the trading range continuing to move tightly around the CNY 47,000/mt price level.

Source: MetalMiner analysis of FastMarkets. 

Like LME prices, SHFE prices continued to look slightly stronger by remaining higher than values seen a couple of months ago.

China’s increased smelting capacity pushes 2020 TC/RCs lower

China copper smelting capacity will increase by an estimated 900,000 tons this year,  according to press reports, plus another 350,000 tons during 2020.

As a result, competition for concentrate drove down treatment charges this year. Therefore, official TC/RCs recently set for 2020 contract negotiations remain lower at $62 per ton for smelting and $0.062 cents/pound for refining.

Demand for copper in China could start to pick up in 2020

China’s manufacturing sector could be rebounding, based on positive PMI readings for November, with both the official and private Caixin/Markit readings coming in higher than expected.

The Caixin/Markit manufacturing index edged up to 51.8, from 51.7 last month.

The official PMI manufacturing reading of 50.2 also crossed 50 this month.

This brings both indexes back into expansionary territory.

Rio Tinto extends Kennecott project through 2032 with $1.5 billion investment

Rio Tinto approved a plan to invest $1.5 billion in its Kennecott copper site in the U.S. The investment will allow mining in a new area of the ore body, which will extend Kennecott operations through 2032. As a result, the company expects to mine close to one million tons of copper from 2026 through 2032.

Kennecott operations presently supply close to 20% of annual U.S. copper production, according to the company.

What this means for industrial buyers

Copper prices moved predominantly sideways of late — with prices generally holding value rather than dropping back, even with slowed Q4 demand growth. Industrial buying organizations need to stay alert for further signs of price increases, in case a pickup in manufacturing impacts prices into the new year.

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.

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual copper prices and trends

Copper prices showed mixed movements this month, but the majority of prices in the index increased mildly.

U.S. producer copper grade 110 and grade 122 increased by 1.5%, the largest increase this month, both now at $3.47 per pound. U.S. producer copper grade 102 increased 1.4% to $3.69 per pound.

China’s copper bar prices increased by 1.0% to $6,729/mt. China’s primary cash and copper wire prices both increased, by 0.8% and 0.9% respectively, to $6,736/mt and $6,732/mt, respectively. China’s copper #2 price held nearly flat at $5460/mt.

Japan’s primary cash price fell by 1.0% – following last month’s 4.0% jump – now at $6,090/mt.

The LME primary 3-month price stayed relatively flat with a 0.5% increase, now at $5,877/mt.

Korean copper strip fell by 1.9% to $7.92 per kilogram.

Indian copper cash prices fell by 1.8% to $6.06 per kilogram.

According to the most recent report from the International Copper Study Group (ICSG), the global copper market through the first eight months of the year posted a deficit of 330,000 tons.

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

Copper mine production slips

Global copper mine production dropped 0.5% on a year-over-year basis, according to the ICSG. Concentrate production was about flat, while solvent extraction-electrowinning (SX-EW) fell 1.5%.

Production in top copper producer Chile remained down, off 0.5% on a year-over-year basis due to lower copper head grades and supply disruptions.

Indonesian copper mine output dropped by 51% due to “the transition of the country’s major two mines to different ore zones leading to temporarily reduced output levels.”

In the Democratic Republic of the Congo (DRC) and Zambia, aggregate growth reached 13% in 2018 but was down 2% through the first eight months of this year due to “temporary suspensions at SX-EW mines, reductions in planned production and few operational constraints.”

On the other hand, output increased in Australia, China, Mexico, Peru and the U.S.

Elsewhere, Panama joined the ranks of copper-mining countries.

“Panama started mining copper earlier this year, with the commissioning of the Cobre de Panama mine, and is the biggest contributor to world mine production growth in the first eight months of 2019,” the ICSG said.

Refined metal production flat

On the refined metal side, output was about flat on a year-over-year basis, with primary production down 0.3% and secondary production from scrap increasing 1.8%.

Chilean output fell 32%, while Zambian output dropped 33%. Indian production was down 25%, as it continues to be impacted by the 2018 closure of Vedanta’s Tuticorin smelter (following protests by area residents).

The U.S., Japan and Peru also saw reduced refined copper output during the period.

Apparent refined usage up 0.5%

In addition, apparent refined copper usage increased by 0.5%, according to preliminary data.

China’s imports of refined copper fell 13%, but its apparent usage grew 2.4% due to higher refinery output, the ICSG said.

Global usage, ex-China, declined by 1.5%.

Copper prices dip slightly in October

On the price front, the average LME cash price in October checked in at $5,742.89 per ton, down 0.04% from September’s average of $5,745.48 per ton.

Meanwhile, the average price for the year through October, $6,007.69 per ton, marked a 7.9% decline compared with the 2018 annual average.

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As of the end of October, copper stocks at major exchanges — 431,192 tons — had increased 23% from stock levels in December 2018.

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This morning in metals news, Tata Steel is making job cuts across its European operations, U.S. Steel announced it plans to reduce its greenhouse gas emissions by 20% by 2030 and copper ticked up again Monday.

Job Cuts Coming to Tata Steel’s European Operations

Steelmaker Tata Steel will cut jobs throughout its European operations, Reuters reported, where the company employs approximately 20,000 people.

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

According to the report, Tata says there won’t be any plant closures.

U.S. Steel Announces Emissions Target

U.S. Steel announced last week it plans to cut emissions by 20% by 2030.

“The company has set a goal to reduce its global greenhouse gas emissions intensity by 20 percent, as measured by the rate of carbon dioxide (CO2) equivalents emitted per ton of finished steel shipped, by 2030 based on 2018 baseline levels,” the company said. “This target will apply to U. S. Steel’s global operations.”

The steelmaker also outlined initiatives toward that goal.

“U.S. Steel’s greenhouse gas emissions intensity reduction goal will be achieved through execution of multiple initiatives,” the company said. “These include the development of electric arc furnace steelmaking at U.S. Steel’s Fairfield Works and at Big River Steel, the first LEED-certified steel mill in the nation, in which U.S. Steel recently acquired a minority interest with an option to acquire the remainder over the next four years. Electric arc furnace steelmaking relies on scrap recycling to produce new steel products, capitalizing on steel’s status as the most recycled material on earth.  Further carbon intensity reductions are expected to come from the company’s introduction of state-of-the-art endless rolling and casting technology and construction of a cogeneration facility at its Mon Valley Works announced in May, as well as implementation of ongoing energy efficiency measures, continued use of renewable energy sources and other process improvements.”

Copper Makes Gains

Copper prices rose for the second straight session Monday, Reuters reported.

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LME three-month copper ticked up 0.1%, while SHFE copper rose 0.3%, according to the report.

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.

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

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.

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

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.