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The Copper Monthly Metals Index (MMI) increased by three points this month to 76, the highest value seen since hitting 78 in May. Individual price increases in the Copper MMI basket fell in the range of roughly 1-6%.

LME copper prices managed to regain the $6,200 level but proceeded to move sideways from there due to a lack of further indications regarding a pickup in demand.

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

From a longer-term perspective, copper prices do not appear particularly strong, but they have not dropped all the way back to 2016 price levels — indicating some level of supply dynamics is still at work and supporting prices.

Source: MetalMiner analysis of FastMarkets

Overall, recent weekly trading volumes looked positive overall but muted from a volume perspective, indicating limited support at this time for the recent uptrend (reflected in the sideways turn in the second half of December).

SHFE copper prices finally break six-month sideways trading band

Like LME prices, SHFE copper prices broke out of a short-term sideways trading band that formed in June and are now trading higher.

Source: MetalMiner analysis of FastMarkets

Breaking the next critical resistance level of CNY 50,000/mt will provide a clearer signal that higher prices will hold throughout Q1 2020.

Source: MetalMiner analysis of FastMarkets

Positive reports regarding a pickup in manufacturing demand late in the year supported prices.

Additionally, recent government measures — particularly monetary easing — appeared to support construction demand, a positive development for copper prices.

Demand for copper, a critical industrial, automotive, and construction metal, will remain high.

Current prices remain supported from a long-term perspective, even in the weaker demand environment seen since last year.

Source: U.S. FRED

Chinese construction demand corresponded with noticeable price increases beginning in 2004. That was followed by a drastic decline in prices and trading volumes in 2008-2009, corresponding to the timing of the global recession, which stalled out property growth in China.

While copper presently trades with lower volumes than during the peak years of China’s construction activity, overall copper trading volumes remain higher than during past decades. Baseline demand should continue to support the somewhat higher copper price level. Falling mining output also matters but may exert less immediate impact on prices.

Looking at the long-term chart of price values provides some sense of the metal’s price downside,  upside risk and potential volatility.

Assuming that supply moves toward surplus, as projected for the year by the International Copper Study Group (ICSG) according to its October annual forecast for 2020, it may be difficult for copper prices to increase this year unless demand improves, despite the long-term downtrend in mine supply.

What this means for industrial buyers

Copper prices increased but then stalled out and have not yet regained momentum.

With prices already somewhat higher, industrial buying organizations will need to watch the prices carefully from here for further increases.

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Buying organizations seeking more monthly insight into copper price trends can learn more about our MetalMiner Monthly Buying Outlook.

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Actual copper prices and trends

Copper prices increased across the board this month, with the LME primary three-month price showing the largest gain at 5.8%, to $6,215/mt. Japan’s primary cash price increased by 5.4% to $6,421/mt.

China’s primary cash and copper wire prices both increased by 4.6%, up to $7,045/mt and $7,040/mt, respectively. China’s copper bar price increased by 4.5% to $7,034/mt. China’s copper #2 scrap price increased by 1.0% — the weakest increase in the index this month — to $5,514/mt.

U.S. producer copper grade 110 and grade 122 increased by 4.3%, both now at $3.62 per pound. U.S. producer copper grade 102 increased by 4.1% to $3.84 per pound.

Korean copper strip increased by 2.8% to $8.14 per kilogram.

The Indian copper cash price increased by 2.3% to $6.20 per kilogram.

The assassination of Iranian top military official Qassem Soleimani outside Baghdad airport last week caused a near 4% surge in oil prices and a drop in share prices as investors took fright at the prospect of an all-out war between the U.S. and Iran. Not long after, however, oil prices retreated over 4% to below $60 per barrel Wednesday morning after President Donald Trump said Iran appeared to be “standing down.”

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In reality, while that remains a possibility, a more likely outcome is an ongoing lower-level exchange of tit-for-tats as evidenced by Iran’s attack overnight earlier this week on two airbases housing U.S. and coalition forces in Iraq.

Read more

The Aluminum Monthly Metals Index (MMI) bounced off last month’s three-year low with a three-point increase to 86. All prices in the index increased by more than 3%.

LME aluminum prices increased in December and surpassed $1,830/mt in early January.

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

Now analysts are watching to see if lackluster demand will allow recent increases to stick.

Read more

The Automotive Monthly Metals Index (MMI) picked up three points, rising to a January MMI reading of 89.

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U.S. auto sales

General Motors reported it delivered 2.89 million vehicles in the U.S. market in 2019, up 12.7% compared with 2018.

Read more

As we head into not just a new year but a new decade, we could be forgiven for thinking we are in much better shape than we were a year ago.

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The British have overwhelmingly affirmed their intent to leave the European Union on Jan. 31. While the terms of any deal with Europe will not be known for another year, the firm departure date of Dec. 31, 2020 — with or without a deal — at least suggests we will not have the can-kicking of the last three-plus years.

Meanwhile, America’s trade war with China is showing some signs of thawing. A little progress has been made in terms of a phase one deal, in which the Trump administration refrained from imposing a new tranche of tariffs that was set to start in December and decided to halve its current 15% tariff rates imposed on $120 billion of Chinese products. In return, China is said to have agreed to substantially increase agricultural purchases, a move that would benefit American farmers who have been bearing the brunt of the trade war.

But according to some sources, the phase one deal will be unlikely to contribute to a sharp reduction of tension in their relations because it leaves unresolved some key issues that have been at the heart of the trade war, such as intellectual property rights and state subsidies.

According to The Times this week, America’s stock markets were buoyed in the second half of 2019 by three interest rate cuts in quick succession made by the U.S. Federal Reserve. Since September, the central bank has also injected hundreds of billions of dollars into short-term money markets to ease a squeeze on lending.

Central banks’ ability, however, to add further support in 2020 is limited.

The Fed is expected to possibly add one more rate cut. However, in Europe, rates are at rock bottom or already negative; further fiscal stimulus would have to come from governments, not central banks.

Both Europe and the U.S. would benefit from investment in infrastructure. There are some signs a loosening of the purse strings may occur in the U.K. and the Netherlands, but Germany is the kingmaker (at least in Europe). Although more conciliatory noises have been emanating from the German Federal Ministry of Finance, it seems unlikely Germany is going to boost E.U. growth by dropping its balanced budget policy, however beneficial that would be for both Germany and the rest of the E.U.

Despite comments that China’s manufacturing picked up in November, there seems little doubt growth is slowing in the world’s second-biggest economy.

An article in The Telegraph quotes Fathom Consulting predictions of a real growth rate closer to 4% in 2020, regardless of what the official figures may report. The expectation is China will add stimulus next year in order to sustain growth and avoid recession, but CRU predicts most of the fiscal aid will come from government spending (unlike in 2019, when it came from tax cuts).

In the long run, this wouldn’t be good news because China already has a debt mountain of more than 250% of GDP. Corporate and household debt have soared rapidly and, while not an immediate threat, poses a longer-term risk to the economy as the population ages and the country’s ability to fund that debt comes under strain.

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

2020 holds a number of risks, but the optimist in us should suggest the November U.S. presidential elections could be a spur to achieve trade solutions with China and Europe that could see less volatility and uncertainty among the major economies.

Risks will remain, but fundamentally the global economy has more positives than negatives.

While some have been predicting an end to the bull market and a looming recession, we remain optimistic that 2020 will see continued growth.

In the short term, a new five-year gas transit agreement between Russia and Ukraine, agreed just 12 days before the current agreement is to expire, is good news for Europe, Russia and Ukraine — a rare example of pragmatism and compromise in today’s winner-takes-all approach to diplomacy.

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But in the longer term the agreement, heralding as it does a waning of the Russian-Ukrainian interdependency, removes an issue that demands a degree of cooperation and opens to the possibility that bilateral tensions could rise in the future.

Still, for now, as a Stratfor Worldview report observes, Europe will not have to worry about keeping the lights on or heating their homes this winter and nor will Ukraine (so economically dependent as it is on gas transit revenues).

The deal is the result of compromise on both sides.

As part of the deal, Russia will gradually reduce its use of Ukrainian pipeline infrastructure over the next five years as it expands its access to the European natural gas market through the Nord Stream 2 and TurkStream pipelines.

Ukraine, meanwhile, will use the next five years to continue its efforts to reduce its dependence on natural gas that comes directly from Russia by ramping up domestic gas production and searching for alternative routes for imports.

As gas volumes decrease through the Ukrainian system — decreasing from the current volume of 90 bcm to 65 bcm next year and just 40 bcm in 2021 — and the infrastructure continues to age, income would be expected to decrease and maintenance expenditure to rise. However, as part of the deal, Russia has agreed to fix transit fees over the next five years at a higher level to allow Ukraine to sustain its roughly $3 billion in revenue even though volumes will halve, Stratfor reports.

It will be interesting to see whether pragmatism and compromise can prevail over the completion of the new Nord Stream 2 and TurkStream pipelines — not between Europe and Russia but between Europe and the U.S.

According to Reuters, President Donald Trump signed a bill late this month imposing sanctions on the Nord Stream 2 gas pipeline project led by Gazprom, Russia’s state-controlled gas company. The project aims to send gas under the Baltic Sea, bypassing Ukraine and doubling the capacity of the existing line.

Source: Stratfor

The threat of sanctions blocking access to the U.S. financial system forced Allseas, a Swiss-Dutch company that lays deep-sea pipe, to suspend work on the project. All but a 100-mile (160-kilometer) stretch remains to be completed, the article states.

Most European countries are furious at the U.S. action, seeing it as interference in an internal European project. The U.S. has been against Europe’s greater reliance on Russian gas since the Obama administration on the grounds it strengthens Putin’s economic and political grip on Europe. Europe suspects the U.S. simply wants to substitute cheap Russian gas for more expensive U.S. liquefied natural gas (LNG) shale gas exports, arguing that if the U.S. were really concerned about Russian influence over Europe, the president would be a stronger advocate of mutual defense and, in particular, NATO.

For now, work toward completion of the last 130 kilometers of the Nord Stream 2 pipeline has been stopped by the sanctions threats, but Russian state media reported Gazprom’s pipe-laying vessel Akademik Cherskiy, currently in the far east, would be brought to the Baltic to complete the pipeline regardless.

Europe’s desire to see dialogue and cooperation with Russia, as opposed to distrust and detachment, may yet prove naive.

Europe relies on Russia for something like half its natural gas supplies and Russia has shown it is not above restricting supplies to achieve its political ends, as happened in 2014 after the Russian annexation of Crimea and Moscow’s attempts to pressure Ukraine — and, hence, Europe — by cutting off gas supplies.

Some European countries agree with the U.S. that diversification, whether to the U.S. or elsewhere, would make more sense, however convenient and cheap Russian gas is. Over-reliance is clearly a risk, however strongly many on the other side argue Russia needs the revenues even more than Europe needs the gas.

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

Mark it down as yet another item on the world’s agenda to be resolved in 2020 requiring compromise and pragmatism all round.

According to recent data from the International Aluminum Institute, global aluminum production in November totaled 5.19 million tons, down from 5.35 million tons the previous month.

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Production in November was also down on a year-over-year basis compared with 5.33 million tons produced in November 2018.

China’s production drops

No. 1 producer China churned out an estimated 2.88 million tons in November, down from 2.98 million tons in October and 3.04 million tons in November 2018.

Around the world

Elsewhere, production from Gulf Cooperation Council (GCC) countries totaled 481,000 tons, down from 494,000 tons the previous month and up from the 432,000 tons produced in November 2018.

Production in east and central Europe totaled 345,000 tons in November, down from 356,000 tons in October and 332,000 tons in November 2018.

Meanwhile, in western Europe, production totaled 282,000 tons in November, down from 286,000 tons the previous month and the 310,000 ton produced in November 2018.

North American production totaled 311,000 tons in November, down from 316,000 tons in October and 318,000 tons in November 2018.

Alumina production

As for alumina production, global output reached 10.92 million tons in November.

China’s aluminum production totaled 5.78 million tons in November.

In other alumina news, Norsk Hydro said power outages impacted its operations at Paragominas and Alunorte (its Brazilian alumina refinery). The firm said a transmission tower overturned Dec. 18, causing the outages.

As a result, production at Alunorte was temporarily reduced to 50-70% “to prolong the lifetime of the bauxite inventories.”

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Aluminum price

The LME aluminum price reached $1,1816/mt as of late last week, up 4.22% from the previous month, according to MetalMiner IndX data.

(To revisit 2019 in aluminum news, check out our most-viewed aluminum-centric posts of the previous year.)

According to recent data from the American Iron and Steel Institute (AISI), U.S. raw steel production for the year through Dec. 21, 2019, had increased 1.8% compared with the same period in 2018.

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Production for the nearly full year in 2019 totaled 94.45 million tons, according to the report, at a capacity utilization rate of 80.1%. The figure marked a 1.8% increase from the 92.78 million tons produced during the same period in 2018 (when the capacity utilization rate hit 78.2%).

Meanwhile, for the week ending Dec. 21, 2019, production totaled 1.87 million tons at a capacity utilization rate of 80.7%. The weekly production total marked a 0.3% increase from the 1.86 million tons produced during the same week in 2018 (when the capacity utilization rate reached 79.4%).

Furthermore, production for the week ending Dec. 21, 2019, marked a 1.2% increase compared with the previous week, when production reached 1.84 million tons at a capacity utilization rate of 79.7%.

The steel industry’s capacity utilization rate reached as high as 81.9% earlier in the year. The U.S. Department of Commerce, when it implemented Section 232 tariffs on imported steel in March 2018, identified the 80% mark as a target to be reached for the domestic steel sector.

Broken down by region, production totals for the week ending Dec. 21, 2019, reached:

  • Northeast: 207,000 tons
  • Great Lakes: 681,000 tons
  • Midwest: 194,000 tons
  • Southern: 695,000 tons
  • Western: 89,000 tons

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U.S. steel prices picked up near the tail end of 2019 after slumping throughout the year.

As of Christmas week, the U.S. HRC price reached $560/st, up 7.69% from the same time the previous month, according to MetalMiner IndX data.

U.S. HDG reached $834/st, up 5.3% on a month-over-month basis.

U.S. CRC ticked up to $754/st, up 6.35% on a month-over-month basis.

The U.S. plate price reached $694/st, up 12.85% from the same time the previous month.

Continuing our look back at some of the most-viewed posts of the year on MetalMiner, today we’ll take a look at some of the most popular copper-centric posts of the year.

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We have already reviewed the top steel and aluminum posts of the year.

Below are the top 10 most-viewed copper-centric posts here on MetalMiner this year:

  1. Copper Prices Forecast to Weaken Further Amid Gloomy Chinese Demand Picture

  2. Copper MMI: How a Boeing Trade Case Could Cause Global Copper Prices to Skyrocket, Give Wieland Metals a Guaranteed Monopoly

  3. ICSG: Global copper market in deficit by 330K tons

  4. Copper MMI: Global Supply Deficit Outweighed by Macroeconomic Uncertainty

  5. Copper MMI: Prices Edge Up As Global Demand Growth Outpaces Supply Growth

  6. Copper MMI: After a Seven-Week Rally, Copper Prices May Have Lost Steam

  7. This Morning in Metals: Copper Price Makes Gains

  8. Freeport-McMorRan Uses AI to Optimize Production at Arizona Copper Mine

  9. Copper MMI Drops as Chilean Production Reaches Historic High

  10. This Morning in Metals: LME Copper Prices Fall

Continuing our look back at some of the most-viewed posts of the year on MetalMiner, today we’ll take a look at some of the most popular steel-centric posts of the year.

Below are the top 10 most-viewed steel-centric posts here on MetalMiner this year:

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