copper price

Global copper mine production rose by 3.7% in the first quarter of 2021, the International Copper Study Group (ICSG) reported this week. The group estimated an apparent global copper surplus of 130,000 metric tons.

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Copper mine production gains to start the year

copper mine

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Global copper mine production recovered during the first three months of the year, the ICSG reported this week.

Concentrate production rose by 5.5%, while solvent extraction-electrowinning fell by 3.5%.

“Output in Peru, the world’s second biggest copper mine producing country, increased by 3% mainly because March production was up by 18% from a constrained March 2020 basis,” the ICSG reported. “However, Jan-Mar 2021 production is still 10% below that of Jan-Mar 2019.”

Earlier this month, Stuart Burns delved into Peru’s ongoing COVID-19 crisis, plus its recent presidential run-off.

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It would seem Beijing only has to speak and the market reacts — this time, it’s about base metals.

Worried by what it sees as excessive inflation in commodity prices, which it fears will lead through into factory gate increases, China warned speculators last month over “excessive speculation.” The warning from China’s National Food and Strategic Reserves Administration hit the iron ore market hard, the Financial Times reports, sending the price 10% lower.

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China turns to base metals

China aluminum

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This month, Beijing has turned its attention to base metals.

The authorities have hinted they may release metal from their strategic reserves. The move would be an overt attempt to dampen further price rises in what it sees as a speculator-fueled rally. Where applicable, it would provide additional supply for those metals where supplies are genuinely tight.

The country holds strategic reserves in copper built up over decades. During slumps, like after the financial crisis, Beijing has stepped in to support domestic producers.

State secrets

As a strategic reserve, copper stocks are a state secret.

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This morning in metals news: the U.S. consumed a record amount of renewable energy in 2020; U.S. housing starts jumped in May; and the copper price has been on the decline since peaking last month.

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.

US hits renewable energy consumption record

renewables

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The U.S. consumed a record amount of renewable energy in 2020, the Energy Information Administration (EIA) reported.

“In 2020, consumption of renewable energy in the United States grew for the fifth year in a row, reaching a record high of 11.6 quadrillion British thermal units (Btu), or 12% of total U.S. energy consumption,” the EIA said. “Renewable energy was the only source of U.S. energy consumption that increased in 2020 from 2019; fossil fuel and nuclear consumption declined.”

Housing starts gain in May

Meanwhile, U.S. housing starts picked up in May from the previous month, the Census Bureau reported.

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The Copper Monthly Metals Index (MMI) increased by 7.8% for this month’s reading, as the copper price remains high but dipped below the $10,000/mt level.

June 2021 Copper MMI chart

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Copper prices retrace

On May 10, the LME three-month copper price closed at $10,720 per metric ton, hitting record highs last month.

Since then, prices declined below $10,000/mt.

SHFE prices followed the same trend.

The price retrace might be due partially to the stern warnings issued by Beijing about market discipline and excessive speculation in an effort to cool off prices.

Moreover, on June 7, trade data from China showed that copper imports fell 8% in May compared to the previous month. This might have scared some investors, as lower imports could mean lower demand, which decreases buying interest.

This could also signal that the pace of economic growth might be slowing. Along with less market speculation, that could mean the price will correct and consolidate.

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This morning in metals news: US nonfarm payroll employment rose by 559,000 in May; the EU plans to impose carbon emissions costs on imports of steel, cement and electricity, Reuters reported; and the LME copper price dropped below $10,000 per metric ton.

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.

Nonfarm payroll employment rises in May

nonfarm payrolls

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Nonfarm payroll employment in the US increased by 559,000 in May, the Bureau of Labor Statistics reported today.

Meanwhile, the unemployment rate declined by 0.3 percentage point to 5.8%.

“Notable job gains occurred in leisure and hospitality, in public and private education, and in health care and social assistance,” the Bureau of Labor Statistics reported.

EU to slap carbon emissions costs on imports

The European Union will introduce new carbon emissions costs on imports of steel, cement and electricity, Reuters reported.

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Global copper mine production rose by 3.5% through the first two months of the year, the International Copper Study Group reported.

Furthermore, copper concentrate production rose by 5% during the period, while solvent extraction-electrowinning fell by about 3%.

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Recovering copper production

copper mine

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Strong Chinese demand powered metals markets last year, particularly as demand still lagged in Europe, the United States and elsewhere.

Meanwhile, on the supply side, copper mine production took a hit, particularly in South America, as the COVID-19 pandemic worsened. (MetalMiner contributor Christopher Rivituso recently summarized developments in the copper market and where prices could go this year.)

However, output recovered throughout the year and into 2021.

Chile, the top copper producer, saw its copper mine production fall by 2.6% during the first two months of the year.

Meanwhile, Peru, the second-largest producer, saw its output fall by 7.5% in January. Peru’s mine output bounced back in February, leading to an aggregated 3.7% drop for the two-month period.

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The copper price is likely to finish 2021 lower than its current level. However, they could yet see some further gains in the year, industry watchers told MetalMiner.

“It’s sentiment-driven,” one analyst said about current prices for the base metal and the prospect for increases in them over the year.

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 roller coaster

copper mine

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Copper could achieve $15,000 for a short while, a second analyst said, but warned that it would not be unsustainable.

Sustained higher prices could also impede rollouts of new electric vehicles. As such, the ongoing “environmental revolution” would precede at a much slower pace, the first source added.

“It would lose so much demand to aluminum in terms of cabling,” which is notably cheaper, the first analyst said about continuing rises in prices.

Copper on the London Metal Exchange (LME) has sharply risen on the year. LME three-month copper reached a high of $10,724.50 per metric ton on May 10. That more than doubled the $5,266 reported on May 11, 2020.

That price has since fallen, however. The copper price finished Monday at $9,868 per metric ton on news that the China’s National Development and Reform Commission warned commodity companies against pushing up prices by maintaining “normal market order.”

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This morning in metals news: the US steel capacity utilization rate reached 79.0% last week; the state-owned Indonesia Battery Corporation and South Korea’s LG will build a $1.2 billion battery plant in Indonesia; and the copper price has cooled since reaching an all-time high earlier this month.

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.

US steel capacity utilization rate at 79.0%

hot rolled steel

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US steel capacity utilization reached 79.0% for the week ending May 22, the American Iron and Steel Institute (AISI) reported.

The rate marked a decline from 79.2% posted the previous week. Meanwhile, the rate for the same week in 2020 had reached just 54.6%.

Production during the week ending May 22 totaled 1,793,000 net tons, down 0.3% from the previous week. However, the output total marked an increase of 46.6% on a year-over-year basis.

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This morning in metals news: UC Rusal will demerge its high-carbon assets; meanwhile, steel industry groups issued a renewed call to the Biden administration to ask him to keep the Section 232 steel tariff in place; and the copper price has picked back up this week.

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UC Rusal to demerge high-carbon assets

Rusal logo

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En+ Group, parent group of Russian aluminum giant UC Rusal, announced today that the latter will demerge its high-carbon assets.

In addition, UC Rusal also plans to change its name to AL+.

The company plans to focus on developing inert anode technology and working toward production of carbon-free aluminum.

“This announcement is another major step in our journey to lead the global aluminium industry into the low carbon economy,” said Lord Barker, executive chairman of En+ Group. “AL+ will be a market leader in green aluminium production as measured by carbon footprint and other environmental credentials. However, this demerger additionally secures the future of important assets in Russia that also have a future in a low carbon world but which require a fundamentally different approach to technology and a different investment path to our major international businesses.”

Meanwhile, the demerged higher-carbon assets will form a new company under a new name. That includes alumina refineries in Russia (Achinsk, Pikalevo, Bogoslovsk and Ural) and smelters in Bratsk, Irkutsk, Novokuznetsk, Volgograd and Kandalaksha, all of which it says will undertake a “long-term modernisation programme.”

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The Copper Monthly Metals Index (MMI) surged by 10.6% for this month’s reading, as the copper price has soared to a record high.

May 2021 Copper MMI chart

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Copper prices reach record highs

Last month, MetalMiner’s Stuart Burns dissected various views on the copper market after prices had retraced from a February peak of around $9,600 per metric ton.

Would the price go up or would it languish? As he noted, banks held differing opinions, with Goldman Sachs being particularly bullish on the red metal.

“JP Morgan is forecasting copper prices to peak at $9,000 per ton this quarter and slide back to $7,865 per metric ton over the second half of the year,” Burns wrote last month. “It argues more plentiful mine supply will take the steam out of the copper market.

“Copper consumers no doubt hope JP Morgan have got it right.

“But as Reuters observes, smelter stocks are low and will take time to replenish. In the meantime, the lack of smelter output in Q2 will leave the market undersupplied in what remains a robust demand environment.”

The answer to the aforementioned question did not take long to materialize.

After previously touching 10-year highs, the copper price has continued to rise and hit record highs this month.

The LME three-month copper price closed Monday at $10,720 per metric ton, up a whopping 19.32% from the previous month.

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