• 16 hours S&P 500 Officially In An Earnings Recession
  • 20 hours Miners Are Weathering The Trade War Storm
  • 23 hours UK Credit Card Interest Rates Are Skyrocketing
  • 2 days From Frenzy To Flop, The Death Of This Year’s Most Hyped IPO
  • 2 days Are Smart TVs Spying On Us?
  • 2 days Is Fossil Fuel Divestment A Waste Of Time?
  • 3 days A Russian Billionaire’s Space Quest To Save Humanity
  • 3 days Markets Take Breather As Consolidation Continues
  • 3 days Economic Woes Weigh On Copper Prices
  • 3 days World's Largest IPO At Risk Following Drone Strikes
  • 4 days Gold Is Beating Buffett’s Berkshire Hathaway
  • 4 days What’s Behind The Silver Sell-Off?
  • 4 days The Retail Apocalypse Is Accelerating
  • 4 days The Top Tech Stocks Of The Year
  • 5 days America’s Workforce Elderly Workforce To Double By 2028
  • 5 days Toyota Tests Solar-Powered Prius
  • 6 days Why The Gold Rally Flatlined
  • 6 days The Uranium Sector Can’t Catch A Break
  • 7 days Upcoming Fed Meeting Has Investors On Edge
  • 7 days Global Gold Sector Outlines Responsible Mining Principles
Protests Threaten $5 Billion Peruvian Copper Mine

Protests Threaten $5 Billion Peruvian Copper Mine

Ongoing anti-mining protests in Peru…

Miners Are Weathering The Trade War Storm

Miners Are Weathering The Trade War Storm

While overall Chinese trade is…

Tackling Lithium Batteries' Biggest Problem

Tackling Lithium Batteries' Biggest Problem

Lithium metal batteries fail when…

Mining.com

Mining.com

Mining.com

MINING.com is a web-based global mining publication focusing on news and commentary about mining and mineral exploration. The site is a one-stop-shop for mining industry…

Contact Author

  1. Home
  2. Commodities
  3. Industrial Metals

Are Copper Naysayers Missing The Big Picture?

Copper

The price of copper came under pressure again on Thursday amid worries about a global economic slowdown, particularly in manufacturing, vital to overall demand for the bellwether metal.

In early afternoon trading in New York, copper for delivery in July was at $2.5475 a pound ($5,615 a tonne), not far off levels last seen in 2017.

Trade worries have dogged copper price bulls for the better part of a year, but more recently weak data from China, the U.S., and Germany, the world’s top three consumers of industrial metals, has intensified the sell-off.

The US manufacturing purchasing managers index (PMI) fell to below 50 today, the lowest reading since 2009 and the first sign that slowing growth in the sector may be turning into outright contraction of activity.

China, which imports more than half the world’s copper, posted the weakest industrial output growth in 16 years in July (although at 4.8% expansion year-on-year, still the envy of developed economies), while the month before German industrial production registered its biggest annual decline in nine years.

new report by Oxford Economics argues that the copper market’s “decent fundamentals are getting overlooked amid the gloomy backdrop for financial markets”:

The latest Copper Study Group data flagged up a 1% fall in global copper mine production in the first four months of 2019. Also, copper is constrained by a weak global pipeline of mine projects, and production in Chile was down 1% y/y in both May and June, partly due to strike action.

Spot treatment charges (which fall during periods of tightness) are currently down 37% y/y.

We expect the copper market to be in deficit this year and as a result prices look oversold relative to fundamentals. 

In another sign of underlying weakness in demand, global copper inventories have been rising steadily after hitting four-year lows in January. Stocks in London Metal Exchange supervised warehouses around the world jumped by 11% over just the past month.

(Click to enlarge)

Oxford Economics Commodity Price Forecasts August 2019

Copper stocks have been rising even as stockpiles of other industrial metals, notably zinc and aluminum shrink, and Oxford Economics says “most metal traders attribute the anomalous behavior of copper as being driven by inventory relocation rather than genuine market weakness.”

The Oxford Economics house view is for the copper price to average around $5,870 a tonne in the fourth quarter this year and climb back above $6,000 early in 2020.

By Mining.com 

More Top Reads From conil.me:

Back to homepage

Leave a comment

Leave a comment