copper price

This morning in metals news: a $2 million project seeks to develop ways to more cost-effectively produce lightweight automotive sheet metals; meanwhile, U.S. Steel joined the global nonprofit ResponsibleSteel™; and the copper price has picked back up over the last week.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

‘Clean Sheet Project’ aims to improve production of recyclable automotive sheet metals

automotive scrap

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A $2 million project at the University of Michigan dubbed the Clean Sheet Project is looking to improve processes behind the production of recyclable, lightweight automotive sheet metals.

According to a release from the Michigan Engineer News Center, the project is a “key effort as major car manufacturers look to lightweight light-duty trucks and shift away from internal combustion engines toward electric cars which require more lightweight components to increase vehicle range.”

The research will initially focus on steel and aluminum, the report states, but could eventually expand to other materials.

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Copper bulls who were betting on continued price rises — or, more importantly, copper consumers worried about escalating copper costs — may be looking at the copper price and wondering what is going on.

Prices hit over $9,600 per metric ton in late February but have since fallen back.

Although experiencing volatility, the copper price has traded in a roughly +/- 2% band just below $9,000 per metric ton since.

copper bars

Shawn Hempel/Adobe Stock

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Copper price views

Bulls like Goldman Sachs argue this is just a pause, ignoring the build in LME stocks. Instead, it points to the collapse in smelter treatment charges as proof the market remains tight.

Low mine output results in tight concentrate supply. When that happens, smelter treatment charges chase the market down in an effort to secure concentrate to process. Treatment charges rise during times of plentiful concentrate supply and fall during times of concentrate famine, Reuters notes.

The contract treatment price for Q1 is $59.50 per ton, the lowest since 2011.

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The Copper Monthly Metals Index (MMI) fell by 2.8% for this month’s reading.

April 2021 Copper MMI chart

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Copper stabilizes after late February, early March drop

The LME three-month copper price surged to a peak of $9,560 in late February.

However, like nickel, the red metal cooled at the end of February and early March. The three-month price fell to $8,757 per metric ton as of March 4.

“This is a classic overbought market in which traders sought to take some profits,” MetalMiner CEO Lisa Reisman explained last month. “With the exception of tin, all of the non-ferrous metals traded down. And though nickel looks weaker (as does lead), most of the non-ferrous metals remain in their uptrend, as does the ferrous metals complex.”

Since then, copper has stabilized. The price has mostly traded between $8,900-$9,000 per metric ton. The three-month price closed Tuesday at $8,893 per metric ton, or down 1.59% from the previous month.

Copper market shift

Elsewhere, Stuart Burns recently delved into the shift in the global copper market as a result of China’s relaxation of scrap import regulations.

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copper mine

Gary Whitton/Adobe Stock

Despite significant drops in output earlier in 2020 at the outset of the COVID-19 pandemic, global copper mine production last year came in unchanged compared with the previous year.

According to the International Copper Study Group, the global copper market posted an apparent deficit of 560,000 tons in 2020.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

ICSG: copper mine production flat in 2020

Copper mine production around the world took a dive in the first half of 2020, as the pandemic disrupted operations and metals demand patterns. Mine output dropped by 3.5% year over year in April-May 2020.

However, the second-half recovery, paced by China, saw production break even for the year.

Peru, the second-largest producer, saw mine production fall 12.5% in 2020. Top producer Chile, meanwhile, saw its output drop just 1%.

Elsewhere, after the transition of two mines to different ore zones, Indonesian output rose by 39%.

“COVID-19 related constraints and other operational issues also resulted in declines in production in other major copper mine producing countries, most notably Australia, Mexico and the United States,” the ICSG added.

Refined production up 1.5%

However, refined copper production rose by 1.5% year over year in 2020.

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copper bars

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The Copper Monthly Metals Index (MMI) picked up by 12.6% for this month’s reading, as the copper price surged to a 10-year high last month.

March 2021 Copper MMI chart

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Copper price rise

The copper price picked back up in February after China’s Lunar New Year celebration (a traditionally slower time of year for economic activity in the country).

The LME three-month price surged to $9,563 per metric ton, reaching an approximately 10-year high.

Since then, however, the price has pulled back. The three-month price closed Thursday at $9,048 per metric ton.

“This is a classic overbought market in which traders sought to take some profits,” MetalMiner CEO Lisa Reisman explains. “With the exception of tin, all of the non-ferrous metals traded down. And though nickel looks weaker (as does lead), most of the non-ferrous metals remain in their uptrend, as does the ferrous metals complex.”

Earlier today, MetalMiner’s Stuart Burns touched on the trajectory of oil prices. As readers of our Annual Outlook — for which we released our March update earlier this week — know, oil prices are a key economic factor MetalMiner considers when analyzing commodities markets.

“Copper has taken much of its cue from oil prices, which remain at or around $65/barrel along with strong demand buoyed by the stimulus package just passed in the US House of Representatives,” Reisman adds. “Moreover, copper has very strong fundamentals — strong demand and not as much supply — which forms the basis of the copper narrative.” 

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Department of Commerce building

The U.S. Department of Commerce. qingwa/Adobe Stock

This morning in metals news: the Department of Commerce said imports of common alloy aluminum sheet from 18 countries are being dumped and benefiting from subsidies; Federal Reserve Governor Lael Brainard this week commented on the US’s economic outlook; and the copper price has retraced somewhat over the last week.

DOC makes common alloy aluminum sheet ruling

The Department of Commerce ruled that common alloy aluminum sheet imports from 18 countries benefited from either dumping or countervailable subsidization.

The affirmative final dumping determination related to imports from: Bahrain, Brazil, Croatia, Egypt, Germany, India, Indonesia, Italy, Oman, Romania, Serbia, Slovenia, South Africa, Spain, Taiwan, and Turkey.

Meanwhile, the countervailing subsidy investigation referred to common alloy aluminum sheet imports from Bahrain, India and Turkey.

In 2019, Germany sent the most common alloy aluminum sheet, by value, to the US, at $286.6 million.

Don’t miss the MetalMiner analyst team on March 24 at 10:00 a.m. CDT for a 30-minute metals market forecast and strategies to deploy in falling markets:

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copper mine

Gary Whitton/Adobe Stock

The copper price has resumed its rise this month after taking a brief pause in January.

Meanwhile, on the supply side, tightening began last year and could exacerbate in the year ahead. Strong demand from China, lack of new mine investment and enthusiasm about copper’s role in the renewables revolution are all contributing to the metal’s bullish run.

Copper’s outlook is strong, MetalMiner’s Stuart Burns explained earlier this week. However, it would not be a surprise to see short-term retrenchment.

“So, for investors to take profits and the copper price to fall back should not come as too much of a surprise after such a strong rise in prices,” he wrote.

“Furthermore, it does not undermine the longer-term bull narrative for the metal. It does suggest, however, copper consumers think carefully before fixing all their requirements for the year at today’s price.”

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Global copper mine production down 0.2%

Mine output — or lack thereof — is contributing to the copper price hot streak.

According to data from the International Copper Study Group, global copper mine production fell by 0.2% year over year during the first 11 months of 2020. The reduction narrowed as the year progressed after a 3.5% aggregate decline in April and May.

Furthermore, the global copper market recorded an apparent deficit of 590,000 metric tons.

By country, second-largest copper producer Peru has recovered after COVID-19 impacts earlier in 2020. Peru’s copper mine output reached its highest levels last year in October and November.

Meanwhile, top producer Chile saw a decline in output from July-November. However, output through the first 11 months of the year matched that of the first 11 months of 2019.

Indonesian output rose by 36%. Output in the Democratic Republic of the Congo and Panama also increased.

Refined copper production picks up

On the other hand, refined copper production rose by 1.8% during the first 11 months of 2020.

Chile’s electrolytic refined output picked up by 28%. Meanwhile, Indian refined output fell by 19%.

Copper price surge

After a sideways January, the copper price has picked up again in recent weeks.

The LME three-month price closed Tuesday at $9,126 per metric ton. The copper price is by more than 14% over the last month.

The ICSG noted the average LME cash price for January reached $7,970.50 per metric ton, or up 9.8% from the December 2020 average.

Find more insight on MetalMiner’s LinkedIn.

copper mine

Gary Whitton/Adobe Stock

This morning in metals news: the copper price rally is going strong; meanwhile, Rio Tinto released its 2020 Annual Report; and, finally, Norilsk Nickel reported a fatal accident at one of its facilities.

Copper price rally

After a January lull, the copper price rally has resumed in February.

The LME three-month copper price closed Friday at $8,763 per metric ton, up 9.3% from the previous month.

Before the copper price rally, the price dropped to $7,748 per metric ton Feb. 2.

Meanwhile, Stuart Burns delved into the copper price rally earlier today.

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Rio Tinto releases 2020 Annual Report

Miner Rio Tinto released its annual report and Sustainability Fact Book today.

“Our strong performance during 2020 was overshadowed by the destruction of the ancient rock shelters in the Juukan Gorge and I reiterate our unreserved apology to the Puutu Kunti Kurrama and Pinikura (PKKP) people,” Rio Tinto Chairman Simon Thompson said. “We fell far short of our values as a company and breached the trust placed in us. It is our responsibility to ensure that the destruction of a site of such exceptional cultural significance never happens again.”

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copper bars

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Copper seems to be a one-way bet the last six months.

The copper price has risen from a low of $4,371 per metric ton in March last year to $8,631 per metric ton Friday on the LME.

According to Reuters, Goldman Sachs and Citi are doubling down on their bull calls for the copper market. The banks have raised their 12-month price target to $10,000 per metric ton.

Copper price drivers

Exchange-traded stocks are low. China has been buying voraciously as its economy bounced back from the early spring 2020 lockdown.

Many bulls are touting the green revolution story as reasons to buy. Automakers’ announcements of impending ends to the internal combustion engine and a total switch to electric has fueled projections of soaring demand.

Meanwhile, a lack of new mine investment over the last few years leaves the supply landscape short of new projects to meet projected demand.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Reasons for pause

But not everyone is buying into the relentless rise in the copper price — at least not in the short term.

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copper bars

Shawn Hempel/Adobe Stock

This morning in metals news: the copper price is on its way back up again; meanwhile, Rio Tinto reached a new power agreement for its ISAL aluminum smelter; and, lastly, oil prices continue to rise.

Copper price surges

After a sleepy January, copper prices are back on the ascent.

The LME three-month copper price closed last week at $8,251 per metric ton. The price marked its 2021 high and, furthermore, a more than eight-year high.

Copper — and other base metals — cooled in January ahead of the Lunar New Year celebrations in China.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Rio Tinto reaches new ISAL power agreement

Rio Tinto announced a new power agreement for its ISAL aluminum smelter in Iceland.

“Rio Tinto has reached agreement on an amended power contract that will allow the ISAL aluminium smelter in Iceland to continue operating with an improved competitive position,” the firm said.

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