Base Metals

Copper Price Update

Base Metals
Copper Investing

Copper prices are on the rise once again at $2.25 per pound, lifted by expectations for economic stimulus in China.

Copper prices are on the rise once again at $2.25 per pound, lifted by expectations for economic stimulus in China.
As Dow Jones Business News reports, market watchers believe that the country will engage in stimulus to help bolster its slowing economic growth.
That could mean more demand for copper, which is used extensively in the construction industry. China is the world’s top copper consumer, accounting for over 40 percent of global demand.
A weaker US dollar has also lent support to the red metal. Still, copper’s gains were capped on Monday, as news of weak housing prices in China signalled oversupply in the real estate market, according to Reuters.
2016 has been a tumultuous year for copper prices thus far, but the metal is currently up 5.23 percent year-to-date, trading at $2.22 per pound. Analysts surveyed by FocusEconomics predict that copper prices will continue to rise this year and next as the global copper surplus shrinks and demand continues to rise.
Certainly, with growing delays in new copper supply set to come online, the market could get tighter sooner than expected. According to a recent report from Bloomberg, CRU group found that only 6 new copper projects will be ready to come online by 2020, with two of those subject to delays.
“The $149 billion pipeline to expand the world’s copper supply is running into trouble,” the news outlet writes.
Here are a few price predictions for Q3 2016, as per FocusEconomics:

  • Commerzbank; $4,900 per tonne
  • Macquarie; $4,800 per tonne
  • JPMorgan; $4,400 per tonne
  • Danske Bank; $5,000 per tonne

Don’t forget to follow us @INN_Resource for real-time news updates.

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article. 

 June 8 2016

The copper price is still down year-to-date, currently sitting at about $2.07 per pound. However, some market watchers and analysts are still expecting copper prices to rise gradually in the medium term.
Comex copper prices have dropped 2.6 percent so far this week, but the red metal got a bit of a bump on Wednesday after it was announced that China’s copper imports had jumped year-on-year. According to Reuters, the nation imported 19.4 percent more copper in May 2016 than in the same month last year. Meanwhile, shipments of copper into China have risen 22 percent in the past five months.
That said, as per another Reuters article, LME copper inventories were also on the rise early this week, with approximately 43,000 tonnes of copper coming into exchange storage in just two days. That’s the biggest delivery in over ten years, and the news agency stated that “hefty stock builds” indicate weakening Chinese demand.

LME copper prices were trading at $4,565 per tonne on Wednesday. “Presumably the Chinese trade data that were published today are the reason why the copper price and other metal prices are not falling any further, as the figures reveal that China imported commodities in relatively large quantities last month,” stated Commerzbank in a note to clients. The firm also stated that, despite the increase in copper imports for China on a year-on-year basis, numbers had declined for the second month in a row.
Certainly, some see more downside for the copper price in the near term. Thomson Reuters is still expecting a surplus—albeit a smaller one—for 2016. While Chinese copper demand has been “better than expected,” the firm states that demand growth is softening. Meanwhile, supply cuts in the space have slowed after roughly 700,000 tonnes in cuts from Freeport McMoran (NYSE:FCX) and Glencore (LSE:GLEN) last year.
However, with those factors in mind, analysts surveyed by FocusEconomics are still forecasting a slight rise in the copper price this year. As per the firm’s latest report from May, here are a few price predictions for the copper price in tonnes for Q4 of 2016:
  • ANZ—$4,850
  • BMO Capital Markets—$4,630
  • Bank of America Merrill Lynch—$5,500
  • Commerzbank—$5,200
  • Deutsche Bank—$4,400

The consensus copper price forecast price for Q4 was $4,972 per tonne, with the consensus for 2016 overall coming in at $4,842.

Company news

Nevsun Resources (TSX:NSU) urged shareholders of Reservoir Minerals (TSXV:RMC) to accept its offer for the company, dismissing what it called “baseless criticisms” from dissident shareholders Jing Bao (Asia) and Shandong Xiangguang Group. “Nevsun believes there is significant risk to Reservoir under the proposed alternative financing, including the risk of a loan default that could cost Reservoir its entire interest in Timok,” said Cliff Davis, President and CEO of Nevsun, in a statement.
Nevsun announced an agreement to acquire Reservoir back in April. Part of the deal provided Reservoir the funds to exercise its right of first offer on its joint venture on the Timok project with Freeport International Holdings, part of Freeport McMoRan (NYSE:FCX) to stop part of the project from going to Lundin Mining (TSX:LUN).
Also this week, Turquoise Hill Resources (TSX:TRQ) provided an update on the start of underground construction at the Oyu Tolgoi project in Mongolia. The company has drawn down approximately $0.4 billion of its project finance facility and has signed a contract with Jacobs Engineering Group (Jacobs) to provide EPCM services for underground development.
Don’t forget to follow us @INN_Resource for real-time news updates.

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article. 
The Conversation (0)


S&P 5004002.87+51.30


Heating Oil2.56-0.02
Natural Gas2.29-0.06