NEWS
Aluminium   Copper   Lead and Zinc  

Copper price bears “overlooking decent fundamentals”

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.

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

Oxford Economics Commodity Price Forecasts August 2019

Trade worries have dogged copper price bulls for the better part of a year, but more recently weak data from China, the US 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.

A 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.

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 behaviour 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.

News No: 6139
Date: 2019/08/24 - 17:52
News Source: MINING.COM

Copper  economic  bellwether metal  aluminum  zinc 

Comments:

Leave a Comment:

   
   
   
 

Europe Zn: Some 2020 contracts settled

Multiple annual supply contracts for special high-grade zinc premiums in Europe have settled at $120/t on an fca basis over the past week.
 

Constellium awards contract to SMS group to modernize the exit end of aluminum hot strip mill at Ravenswood

SMS group has received an order from Constellium Rolled Products Ravenswood, LLC, USA, for the modernization of the 112 inch finishing mill exit end of its aluminum hot strip mill.
 

Constellium Singen again relies on aluminum extrusion technology from SMS group

Constellium Singen GmbH has contracted SMS group to supply a 45-MN extrusion press for its largest works in Germany. Based on a long-lasting business relationship, Constellium Singen again counts on the technological expertise of SMS group.
 

Acting banks to loan $3b to develop oil industry’s upstream sector

Iranian acting banks are authorized to offer up to $3 billion of loans to the oil industry’s upstream sector, according to the country’s budget bill for the next calendar year (starts on March 19, 2020), IRNA reported.
 

Tehran, Muscat explore avenues of economic co-op

An Iran-Oman business forum was held on Sunday, in which the two countries explored ways of further boosting economic relations, IRNA reported.
 

FDI in Iran rises 20% in 7 months on year

Foreign direct investment (FDI) in Iran has risen 20 percent during the first seven months of the current Iranian calendar year (March 21-October 22) from the same period of time in the past year, Iranian Finance and Economic Affairs Minister Farhad Dejpasand announced on Monday.
Upcoming Events
Publications
 Mines & Metals

Mine & Business Today

 Scrap & Recycling

Ahangan

Our partners