Base Metals

Copper Investing

Copper prices fell, touching a three-month low, ahead of this week’s decision from the US Federal Reserve on interest rates.

Copper prices fell on Tuesday (March 20) as investors awaited the US Federal Reserve’s decision on interest rates later this week.

The central bank is widely expected to increase interest rates, which could boost the US dollar and hurt base metals such as copper.

A higher greenback makes commodities priced in dollars more expensive for investors using other currencies.

“The risk-off tone in global markets, alongside relatively weak economic data, is likely to keep commodity prices under pressure,” ANZ wrote in a note.

That said, the long-term outlook for copper remains strong, with market participants expecting prices to continue to trend upwards.

“Looking beyond 2018, prices look set to trend upwards, on greater demand for infrastructure, electric vehicles and renewable energy,” FocusEconomics analysts said in their latest report.

In terms of supply, production is expected to pick up this year, but the market is likely to remain in deficit. Looking ahead, Glencore (LSE:GLEN) CEO Ivan Glasenberg expects a copper supply crunch.

“I think so … when you look at new mines, new tonnage. Grades are going down at a lot of the big mines, some are closing. The new mines aren’t adding enough … you’ve got to add another 500,000 tonnes per year,” he said at the FT Commodities Global Summit conference in Switzerland.

“Provided demand is there and China doesn’t crack. And we have 1-2 percent growth … yes, we could have a crunch,” Glasenberg added.

Similarly, Ivanhoe Mines (TSX:IVN) Chairman Robert Friedland sees the copper market tightening and prices going higher in the future.

“It’s a lot harder than you think to find a really large copper mine, one that’s at the bottom of cost break, and a long term arrangement with local people. We went through that in Mongolia,” he explained.

“The world needs probably 5 or 6 absolutely tier-1 copper mines in the next decade to be discovered and brought onstream but we just don’t see them,” Friedland also noted.

On Tuesday, copper on the London Metal Exchange closed 1.4 percent down at U$$6,755 per tonne.

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

Securities Disclosure: I, Priscila Barrera, currently hold no direct investment interest in any company mentioned in this article.

MARKETS

Markets
TSX19062.91+345.79
TSXV647.33+15.54
DOW31500.68+823.32
S&P 5003911.74+116.01
NASD11607.62+375.43
ASX6528.40+19.90

COMMODITIES

Commodities
Gold1830.97+3.90
Silver21.16+0.04
Copper3.78+0.03
Palladium1887.50+14.49
Platinum912.50+5.55
Oil106.52-1.10
Heating Oil4.22-0.02
Natural Gas6.14-0.08

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