Copper

This morning in metals news: LME copper prices have ticked up; the U.S. monthly trade deficit increased from October to November; and, lastly, WTI crude prices made some gains this week.

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Copper prices rise

copper mine in Peru

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Copper prices had trended firmly in between MetalMiner support and resistance levels for much of Q4 2021.

However, copper prices have showed signs of upward momentum.

The LME three-month copper price closed Tuesday at $9,759 per metric ton. The price had increased 2.94% month over month, MetalMiner Insights data indicate.

US trade deficit reaches $80.2M in November

The U.S. trade deficit reached $80.2 billion in November, the Census Bureau and Bureau of Economic Analysis reported.

The deficit increased from $67.2 billion in October.

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This morning in metals news: copper prices have moved sideways to close 2021; meanwhile, the U.S. construction sector added jobs in November; and, finally, Northvolt said it had produced the first lithium-ion battery cell at its gigafactory in Sweden.

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Copper prices trend sideways

copper mine

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Copper prices have consolidated and trended sideways to close the year.

The LME three-month price surged to nearly $10,300 per metric ton level in October, according to MetalMiner Insights data. The price proceeded to slide to close that month and has since trended sideways.

LME three-month copper closed Tuesday at $9,620 per metric ton, or up 0.1% month over month.

Construction employment rises

Construction employment picked up in November in a majority of U.S. metro areas, the Associated General Contractors of America reported.

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This morning in metals news: U.S. Steel released its guidance for Q4 2021; U.S. job openings increased in 16 states in October; and, lastly, copper prices continue to trade sideways.

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U.S. Steel releases Q4 guidance

U.S. Steel logo

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U.S. Steel said it expects its Q4 2021 adjusted EBITDA to come in at $1.65 billion.

“Next year, our fixed price contracts are resetting significantly higher, providing better earnings stability compared with competitors with more spot exposure,” CEO David B. Burritt said. “Additionally, incremental demand drivers are materializing, and we believe the steel industry super cycle will continue. Our fourth quarter guidance indicates another quarter of strong performance yet reflects a temporary slowdown in order entry activity, which we believe is related to typical seasonal year-end buying activity.”

The firm said its flat-rolled segment would deliver EBITDA of $1 billion.

“The strong performance is driven by increased flow-through of higher steel selling prices offset by cautious seasonal buying and higher raw material and energy costs,” the firm added.

Job openings rise in 16 states

U.S. jobs openings increased in 16 states in October, the Bureau of Labor Statistics reported.

Openings declined in two states and were relatively unchanged in 32 states. Hawaii, Minnesota and Kentucky posted the largest increases in job opening rates.

Copper continues to move sideways

In the copper market, copper prices have continued to move sideways over the last six weeks.

The LME copper price closed Wednesday at $9,495 per metric ton, per MetalMiner Insights data. The price fell 2.4% month over month.

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The Copper Monthly Metals Index (MMI) held flat for this month’s reading.

December 2021 Copper MMI chart

After the mid-October spike, copper prices have begun to consolidate.

Any bullish technical patterns are at risk of invalidation, as prices appear to trade consistently lower. Additionally, its failure to break out of any bullish structures within smaller time frames suggests a weakness in buyer momentum.

Until the occurrence of a strong rally to continue the long-term uptrend, copper will likely become bearish, as it cannot sustain its breakthroughs of historical resistance levels.

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Fed may accelerate tapering

As inflationary pressures mount, the Federal Reserve may double the pace of its tapering of quantitative easing measures that were put in place at the onset of the pandemic. The Fed had started to reduce bond purchases from $120 billion per month in November on track to be completed by mid-2022.

Recent testimony from Fed Chair Jerome Powell indicated support for increasing tapering efforts, with expectations it may reach $30 billion per month following the upcoming Dec. 14-15 Federal Reserve board meetings.

The Consumer Price Index reached a 30-year high in October, expanding to 6.2%. In a recent blog post, the IMF encouraged such policy revisions, stating, “We see grounds for monetary policy in the United States—with gross domestic product close to pre-pandemic trends, tight labor markets, and now broad-based inflationary pressures—to place greater weight on inflation risks as compared to some other advanced economies including the euro area. It would be appropriate for the Federal Reserve to accelerate the taper of the asset purchases and bring forward the path for policy rate increase.”

Historically, copper prices have a positive correlation with inflation. Efforts to rein in inflation will likely add to bullish sentiment.

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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

Gary Whitton/Adobe Stock

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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Two years ago, Indonesia instituted a ban on nickel ore exports.

Now, it is contemplating banning exports of tin and copper ore, too.

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Indonesia export bans prompt tin price surge

Indonesia on a globe

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Indonesian President Joko Widodo has been announcing from different forums that his country may stop the export of bauxite next year, copper ore in 2023 and tin in 2024.

On the heels of the announcements, the tin price has surged, MetalMiner Insights data shows. (Subscribers can find additional tin and copper analysis in the next Monthly Metal Outlook report, which will be released Wednesday, Dec. 1.)

The LME three-month tin price closed Monday at $39,450 per metric ton. The price is up 6.6% month over month.

For long, Indonesia has been a major exporter of metal ores, mostly to Asian countries, including China and Japan. The ban on nickel exports had triggered investments, mostly from China, into Indonesian nickel processing.

As part of efforts to improve the country’s external balance & attract investments into the resource processing industry, Indonesia may stop tin exports in 2024, the Indonesian President reiterated last week at the Indonesian central bank’s annual gathering.

The president has made similar statements in recent public appearances about the country’s long-term dependence on raw commodities, reducing its export earnings and employment opportunities.

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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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Metals will play a significant role in helping governments and companies to address climate issues by aiding the transition to cleaner energy and ultimately decreasing carbon emissions, industry watchers said.

“The metals industry is crucial to facilitating this,” one analyst told MetalMiner.

“If you want energy transition, it is not going to happen without metals and mining,” the analyst added.

His and other analysts’ comments come as the 2021 United Nations Climate Change Conference, also known as COP26 (Conference of the Parties), which took place in Glasgow from Oct. 31-Nov. 13.

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Phasing out coal

carbon emissions

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The conference ended with an agreement to work towards limiting an increase in global temperature to 1.5 degrees Celsius. Chief amongst the steps to achieve that is the limiting of coal.

Up to 40 countries had originally planned to “phase out” coal usage in the next 10-20 years. However, the world’s largest users — China, India and the United States — were able to change the wording to “phase down.”

Much depends on China and what it does with coal, however. That includes running power stations and providing feedstock for steelmakers’ coking ovens, the first analyst said.

“I don’t doubt that China will wean itself off of coal,” the first analyst said, “but the reality is that coal will be around in another 30 years.”

Other parts of the climate agreement included 100 countries’ agreement to achieve a 30% cut in methane levels by 2030. Indian Prime Minister Narendra Modi also announced at the conference his country’s plan to achieve net-zero carbon emissions by 2070 as well as to achieve some reduction by 2030.

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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.

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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

Jose Luis Stephens/Adobe Stock

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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