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Copper began trading under $2 per pound on Monday.
Copper prices have remained under pressure this week, continuing their downward trend to begin trading under $2 per pound on Monday.
LME copper prices closed down 0.9 percent, at US$4,485 per tonne, on Monday, with the fall being largely driven by worries over over China’s economy. Trading in the country was halted twice last week when a 7-percent drop triggered a circuit-breaker mechanism that shut down trading for the rest of the day.
“There’s a lot of uncertainty about China. There’s also the weak data we saw this week and a perception that China’s economy is going to continue struggling,” an ICBC Standard Bank analyst told the Australian Associated Press on Monday.
However, prices closed at about $1.95 per pound on Wednesday after rising slightly on the back of data showing record copper imports from China. According to The Wall Street Journal, customs data released on Tuesday shows that 530,000 metric tons of copper products were imported for the month of December. That’s an increase of 26 percent year-over-year.
That might seem odd in light of broader worries over Chinese copper demand. Indeed, as per the Journal, Commerzbank (OTCMKTS:CRZBY) has drawn attention to the idea that some of that trade may have been “opportunistic buying and stockpiling at low prices.” Still, ANZ Research said that the data is more indicative of stronger demand. Meanwhile, traders in China told RBC that the rise in imports for December could have been the result of companies aiming to meet their trading targets for the year.
For his part, Stefan Ioannou of Haywood Securities admitted that it is “hard to say” which is closer to the truth, but stated, “it wouldn’t be the first time [China has] opportunistically stocked up at low prices.” He also pointed out that opportunistic stockpiling or not, “at least there is demand for copper, period.”
Looking ahead, Ioannou said that roughly 20 percent of the world’s copper production is currently not economic on a C1-cash-cost basis, and that he expects to see further production cuts this year as producers face increasing pressure.
“You can only weather that storm for so long,” he said. “I think we’re going to see more and more production shut out.” So far, Glencore (LSE:GLEN) and Freeport-McMoRan (NYSE:FCX) have been the only large copper producers to make major cuts.
In the meantime, other analysts and bank researchers have lowered their forecasts for copper. In its 2016 outlook and forecast revisions for base metals and bulk commodities, BMO Capital Markets reduced its 2016 copper price forecast from $2.35 to $2 per pound. The firm dropped its long-term nominal copper price forecast from $3.20 to $3.05 per pound.
Junior company news
On Monday, Copper North Mining (TSXV:COL) reported additional drill results from its Carmacks copper-gold–silver project in Canada’s Yukon. Highlights include 23.85 meters of 0.73 percent total copper, 0.16 g/t gold and 2.6 g/t silver, as well as 22.34 meters of 0.59 percent total copper, 0.13 g/t gold and 2.36 g/t silver.
Also on Monday, Carube Copper (TSXV:CUC) announced that its joint venture partner OZ Minerals (ASX:OZL) has completed Phase 4 of funding to earn a 70-percent interest in the Bellas Gate project in Jamaica. Total exploration expenditures to date sit at $8.3 million.
“I am very pleased with the rapid progress OZ Minerals has made in completing Phase 4 within 2 years of initiating the Bellas Gate Joint Venture, a full eighteen months ahead of schedule,” said Carube President and CEO Jeff Ackert in a statement.
Finally, American CuMo Mining (TSXV:MLY,OTC Pink:MLYCF) is seeing positive results from the use of ore-sorting technology on samples from its CuMo deposit in Idaho. Preliminary results suggest that the deposit could be amenable to “significant upgrading” using the technology, which uses “sophisticated X-ray technology (XRF/XRT) to identify rocks that contain processing grade minerals and separates them from those that do not.”
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Copper North Mining and American CuMo Mining are clients of the Investing News Network. This article is not paid-for content.
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