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Monthly Copper Bulletin-NOVEMBER16

   MARKET COMMENTARY

The market was taking heart from signs U.S. factory activity accelerated to a five-month high in November amid a pickup in new orders and production, suggesting that the manufacturing sector was regaining its footingbring infrastructure spendinggrowth. This rally was driven by a perception that Donald Trump's election as U.S. president would lead to increased U.S. infrastructure spending. It has since unravelled that rally as the market digested the implications for demand.

OPEC’s three largest producers -- Saudi Arabia, Iraq and Iran -- overcame disagreements to reach November’s landmark deal in a bid to drain record global inventories and bolster the price of crude. OPEC agreed to reduce collective production by 1.2 million barrels a day to 32.5 million and Russia pledged a cut of 300,000 prompting predictions of a possible crude rally to $60 a barrel.

China's imports grew at the fastest pace in more than two years in November, fuelled by its strong thirst for commodities from coal to iron ore, while exports also rose unexpectedly, reflecting a pick-up in both domestic and global demand. China's official PMI rose to 51.7 in November from 51.2.

The dollar surged to its highest in 14 years against a basket of currencies after the Fed raised rates by 25 basis points and signalled that a further three increases are likely next year -- one more than forecast at the September meeting. Copper prices slipped as the dollar climbed after the U.S. Federal Reserve hinted that interest rates could rise faster next year and higher inventories cast doubt on the strength of demand and expectations of tighter supply. In general copper prices surged 20 percent last month. Momentum was driven by hopes that U.S. President-elect Donald Trump would spend more on infrastructure and that Chinese economic activity and speculative spending would pick up.

Copper inventories in warehouses registered with the London Metal Exchange (LME) rose last week, exchange data showed, their biggest daily increase since July 2001. That took them to their highest in around two months. Stocks have surged 62 percent from their early December low. Three-month copper on the LME was down about 3 percent at $5,459 on 19th December. Prices rose to a 17-month peak of $6,045.50 a tonne last month, but have since succumbed to selling. The copper price on Wednesday edged further away from a one-month low hit earlier in the week, with investors betting that stronger U.S. and China economies next year would bolster demand for industrial metals 

 



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Monthly Copper Bulletin-OCTOBER16

   MARKET COMMENTARY  

Markets are off to a fairly quiet start so far October, with  action being muted by week-long holidays in China. We got news out of China that the official manufacturing PMI index came in at 50.4, unchanged from last month. In addition, new export orders increased, while activity in services expanded as well, coming in at 53.7 from 53.5 in August. However, none of these reports had much of an impact on copper prices.

With regard to 13th October market action, zinc and copper are leading the declines, with the latter hitting a four-week low. Copper is likely weaker on account of the latest Chinese September trade data showing another sharp decline in refined imports, down 26% versus last year and off by some 10,000 tons from August. LME copper was  being under the most pressure until 24th of October with no real news behind the climb other than what China-related stories kept the complex steady amid rumors of an imminent government stimulus plan being rolled out. Metals are firmer again at the end of the October, ahead of the US Q3 GDP report (expected at 2.5%). London copper finished October on flat.

Base metals rallied sharply on November with the US election. London copper jumped 4 percent to its highest in nearly 16 months on 10th November expectations that policies under U.S. President-elect Donald Trump could spur infrastructure spending. The market climbed to its highest since June 2015 at $6,025.50 a tonne on 11th November. London copper futures dropped last week as the dollar soared to a 13-1/2-year high against a basket of currencies after Federal Reserve Chair Janet Yellen signalled U.S. interest rates could rise "relatively soon." London copper jumped to $5,939 for a fourth day in a row on Thursday as investors poured funds into metals in expectation of inflation in China and the United States, and on signs of growing strength in the U.S. manufacturing sector today. Bets that the U.S. will raise rates in December and again next year pushed up the dollar, adding to the allure of commodities for investors seeking a hedge against inflation. Meanwhile, China fixed its yuan midpoint at the weakest since June 2008, which also encouraged mainland investors to chase commodities as a hedge against further dollar strength amid lower yields in other asset classes and a steadily improving fundamental picture.



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Monthly Copper Bulletin-SEPTEMBER16

MARKET COMMENTARY 

Most of the market action in September was compressed into the latter part of the month as that was when a number of key events took place. These included the Federal Reserve meeting on the 21st, followed by an informal OPEC meeting a few days later, along with the first US presidential debate squeezed in between the two.

Copper pushed higher during September, gaining roughly $300/ton and getting to almost $4900/ton at one point. However, we since have backed off in October, dragged down by lower precious metals and stronger dolar. On the whole, there has not been much change in copper’s story this past month; the ICSG has the market in a deficit of a 264,000 tons through the first seven months of 2016 but with only modest year-over-year fall in Chiliean refined production and surging Mongolian and Peruvian mine output. Meanwile, copper producers remain profitable. In this regard, we came across some weeks ago showed that even when prices dropped to the 2016 lows of around $4350, the most expensive producers were still managing to break even. Part of the reason margins remain strong is because costs are continuing to fall, led by cheaper energy, freight and labor. A stronger dolar also been helping lately

London copper slipped big part of October with stronger dollar weighed on commodities and concerns about fresh curbs on China's property market, a key consumer of the metal. Three-month copper on the London Metal Exchange edged down to $4,633.50 a tonne on 21st Oct. But copper prices turn back and edged up on Monday (24th Oct)  to $4,754.35 with supply in China's domestic market tightened, more than offsetting a stronger dollar and expectations of ample supply next year. Global markets are bracing for a slew of data this week that may yield more insight into metals demand, including third quarter U.S. GDP and purchasing managers' index (PMI) data from several developed economies. 

 



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Monthly Copper Bulletin-AUGUST16

MARKET COMMENTARY  

Copper was the worst performer in the base metals complex during the August. Maenwhile, a number of reports are showing a marked thigtening in the supply/demand balance, including WBMS numbers that reveal a 197,000 tonnes deficit for the first six months of 2016 ( a surplus of 372,000 tonnes the same period of 2015) and ICSG projection that has the market 306,000 tonnes during the first six months of this year  (compared to a 54,000 tonnes deficit seen a year ago). However, investors do not seem alarmed by these shortfalls, largely because the expect surpluses to emerge over the balance of the year.

Chilean output ise lagging, with first half output of some 5 percent (at 3.28 million tonnes year to date thorugh July). Peru is more than making up for the slack. Morever despite the projected WBMS/ICSG deficits, LME stocks are not showing any singn of stres increasing about 84,000 tonnes this past month (to almost a one-year high). Shangai holdings have been flat in August and are not offsetting the LME increases.

We see copper trading $4582-4869 during September. Copper rallied to a six-week high to $4869 on 22.09.2016  as the dollar slipped after the U.S. central bank left benchmark interest rates unchanged, though gains were limited by worries about slow demand growth. The Fed left rates on hold and projected a less aggressive path for rises over the coming years. That exerted pressure on the U.S. currency, a weakening of which makes dollar-denominated commodities cheaper for non-U.S. firms. "Central banks are happy to support what economic growth there is with cheap money; that's fuel for industrial metals," said Societe Generale analyst Robin Bhar."But the market will struggle to sustain rallies because demand isn't strong . Also expected to weigh on metals is weak demand growth in China, which consumes nearly half of all industrial metals produced.



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Monthly Copper Bulletin-JULY16

MARKET COMMENTARY  

Several banks, including the ECB, the Bank of England, the Bank of Japan, the PBOC and the Federal Reserve, all decided to keep their powder dry for the time being, thus bringing a four-month run in commodities to a halt in July.

Copper prices finished largely unchanged over the course of July, fluctuating between $4685-$5032. For much of the month, the metal took a back seat to other highfliers like zinc and nickel, mainly because there was no compelling change in copper’s fundamentals. In this regard, Chinese June copper imports continued to fall for a third month in a row, with overall intake at 305,000 tons, a 10-month low. However, the cumulative Jan-June total is just over 2.07 mln tons, a respectable 24% over last year. Still, Chinese demand is likely growing at low single digits at best, which suggests that these imports are likely being stockpiled, arbitraged (perhaps explaining the 200,000 tons of copper that has been exported so far this year), or financed.

In other news, the ICGS reports that the refined market was in a 119,000-ton deficit in the first four months of this year, compared to a 13,000-ton surplus in the same period a year earlier. But with all major producers reporting sharp year-over-year production increases (led by Peru, up some 50% y-o-y, as the Cerro Verde and Las Bambas mines come on stream).  Chinese deals were reported to be close to that level as well as China continue to ramp up its production, up 7.5% through June over year ago levels. The latest Reuters poll has an average forecast price of $4751/ton for copper in 2016, rising to $4980 next year. Analysts also see a surplus of 185,000 tons this year, rising to a 204,000 surplus in 2017.

On the first day of August London copper hit the highest since July 22 at $4,965 a tonne. But copper gave all gains immediately with concerns of China’s economic growth . London copper continue to edged down after a solid jobs report boosted prospects the U.S. Federal Reserve could still raise rates this year, and ahead of China trade data that could shed light on its appetite for metals. London copper drifted on 8th of August, when prices fell to their weakest since July 12 at $4,761 a tonne, as inflation in China eased in July, highlighting worries about the health of the world's top copper consumer after imports fell last month. LME copper traded up 0.2 percent to $4,830 a tonne by 1358 GMT, adding to gains of 0.9 percent made a day earlier. Prices on Tuesday fell to the lowest in four weeks at $4,761 a tonne.



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Monthly Copper Bulletin-MAY16

MARKET COMMENTARY  

After poking above $5000 early in May, prices headed lower during the balance of the month, getting to a three-month low of $4540 at one point. A stronger dolar and concern about Chinese end-user demand continue to weigh on valuations. In the latter regard, despite the strong run of refined copper imports into China. The numbers show that China imported 1.88 mln tons of copper during Jan-April, up 23.1% from a year ago. It is inconceivable that domestic demand has grown anywhere near that amount and neither is it likely that imports are making up for lower domestic output since the latter is actually up 11% year-on-year.

On the supply side, Chilean copper output fellin April (off some 8.2% y-o-y), but this was more on account of the heavy rains, so it is possible that production could recover going into the next few months. At the height of the heaviest rains, both Anglo and Codelco temporarily suspended a combined 880,000 tons of output, but both have since resumed production. Other than that, there isn’t any major cut backs and the refined market remains relatively comfortable, borne out by restrained premiums and the latest ICSG report showing the copper market in a 76,000 ton surplus.

London copper climbed away from near its lowest level in a fortnight on Wednesday, as the dollar stayed weak and after China reported strong copper imports in May.

China's copper imports jumped 19.4 percent from the same month a year ago to 430,000 tonnes last month, customs data showed on Wednesday. "The normal seasonal slowdown in Chinese commodity imports didn't materialise in May, with most commodities recording strong growth," said analyst Daniel Hynes of ANZ in Sydney.

Overall, trade data was mixed, as China's exports fell more than expected given stubbornly weak global demand, but imports beat forecasts, pointing to improving domestic demand and adding to hopes that the world's second-largest economy may be slowly stabilising. China's central bank also slashed its forecast for exports on Wednesday, predicting a second straight annual fall in shipments, but said the economy will still grow 6.8 percent this year.

Three-month copper on the London Metal Exchange had climbed 0.9 percent to $4,605 a tonne by 1317 GMT, paring 2.6-percent losses from the previous session, when prices plumbed their weakest in a fortnight at $4,552 and teetered near the lowest since February.

Chinese imports of copper concentrate jumped by 13 percent on the previous month and were up 45 percent from a year ago. "Overall, we expect China's copper imports to ease further in June as rising treatment and refining charges (TC/RCs) and domestic smelting production will increase domestic supply and reduce import demand," Argonaut Securities said in a note. A surge of copper into Asian warehouses has revived concerns that China is shipping out its surplus metal, ramping downward pressure on international prices.

At the same time, however, a softer dollar was limiting losses on hopes that the U.S. Federal Reserve will not raise interest rates in the coming months after last week's disappointingly weak U.S. jobs report. The U.S. dollar hit its cheapest in more than four weeks against a basket of currencies on Wednesday, boosting the buying power of commodities users paying with other currencies.

 



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Monthly Copper Bulletin-APRIL6

MARKET COMMENTARY

After hitting a one-month low of $4633 in mid-April, copper recovered nicely, crossing over $5,000 late in the month and closing just above that mark by month end. Prices have been helped by a number of factors, including a weaker dollar, growing fund interest in commodities and a slightly more constructive tone in the fundamentals.

Reflecting the latter, China’s imports of copper ores and concs rose by a whopping 34% from a year ago, while March refined imports came in at a record 570,000 tons, up about 30% from February. Q1 imports are now up 39% y-o-y and talk is that April and May intake will be high as well. Again, not much of this influx seems to be “in synch” with what we are hearing with regard to the physical business in China. In this regard, CRU sees real copper demand rising by only 0.6% this year amid a market that is forecast to remain in surplus (by 150,000 tons according to GFMS). Granted, spot business in China has become better recently, but it certainly does not warrant a 30% y-over-y increase in imports.

High stocks in Shanghai (now at a one-year high) also do not justify the strong rebound. The disconnect between soaring imports and steady, but not spectacular demand, tells us that much of the copper being brought in is either being arbed, financed or stored. On the supply side, it seems that the bulk of producers remain profitable, although those on the high side of the cost curve (with cash costs between $4,000-$5,000) are barely eking out a margin, this according to CRU. That should change if prices pull away, but it would also mean that additional cutbacks would also not take place.

Copper fell for a second session on Wednesday as weak global manufacturing activity unsettled markets only recently soothed by signs of a possible pickup in China's economy. Global manufacturing growth almost stalled last month as rising prices halted an upturn in new orders, a survey showed.

In China, factory activity shrank for a 14th consecutive month in April, according to a private survey, presenting a mixed picture of the health of the world's No.2 economy and top copper consumer. "Disappointing manufacturing data in China raised some doubts in investors' minds after the strong rally in recent weeks," ANZ said in a note.

Three-month copper on the London Metal Exchange had slipped 0.5 percent to $4,896 a tonne, adding to 2.6-percent losses from the previous session. Prices on Friday struck their highest in a week at $5,073.50.

As of now, a stronger dollar is weighing on demand for commodities priced in the greenback. The dollar came off 15-month lows against a basket of currencies reached on Tuesday to hit its highest in three sessions, eroding the purchasing power of buyers paying with other currencies.

 



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Monthly Copper Bulletin-MARCH16

MARKET COMMENTARY  

Copper bounced in March, with much of the move tracking the dollar, as the fundamentals of the complex remain dreary. Chinese demand is sluggish, manifesting itself in the surge we are seeing in Shanghai stocks, which recently got to 400,000 tons, more than double year-end 2015 levels. And although LME stocks have fallen by 90,000 tons so far in 2016 (the lowest since Feb. 2015), investors suspect the drawdown is feeding mostly into arb and/or finance-related trading. The latter may also explain the rise in Chinese imports, with Jan/Feb intake totaling 652,000 tons, 28% higher y-o-y and well in excess of any demand bounce that could justify such an increase.

Elsewhere, the ICSG sees the global refined market remaining "essentially balanced" in 2016/2017 compared with its previous forecast of a 175,000-ton surplus for this year. "Downward revisions have been made for both production and usage in view of a weaker economic outlook, project delays and price-related production cuts" the ICSG said. World mine production is seen rising 1.5% this year by 2.5% in 2017, well below the 4%-5% increase the Group was calling for just six month ago. Refined copper production is expected to move up by just 0.5% this year compared with 1.6% in 2015. However, the ICSG data may have been compiled when prices were much lower and the mine numbers could change if we get to $5,000 or above, as at that level, the vast majority of producers would be profitable.

Copper clung to small overnight gains today supported by a weaker dollar, but it remained within striking distance of a one-month low on concerns over demand from top consumer China.

Copper rallied in the beginning of the year along with other commodities, but has fallen nearly 7 percent since hitting a four-month peak in mid-March. Analysts say the price rally was overdone and that physical demand has not risen.

Three-month copper on the London Metal Exchange was little changed at $4,770 a tonne by 1432 GMT. The metal hit a one-month low of $4,751 on Tuesday before closing the session up 0.3 percent.

"We are forecasting the price to go down mainly because the demand growth is weaker this year," said Chunlan Li of consultancy CRU in Beijing. "Demand has picked up month-on-month, but is still low as compared with the same period last year," she said. Li expects Chinese copper demand to grow 0.6 percent this year, lower than the 3.8-percent growth seen last year.

Copper prices are expected to slide below January's 6-1/2 year lows, hit by a lack of production cutbacks and weak demand in the world's biggest metals consumer China, said GFMS analysts at Thomson Reuters. Data on Wednesday showed that activity in China's service sector strengthened in March, but employment fell for the first time in over 2.5 years, sending mixed signals on the health of a sector, which Beijing is counting on to offset prolonged weakness in manufacturing. For now, copper was supported by a softer dollar that makes the greenback-denominated commodities cheaper for holders of other currencies. 



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Monthly Copper Bulletin-FEB16

MARKET COMMENTARY  

Copper was steady last month, trading between $4430-$4771. However, prices really took off this past week, taking out the $5000 mark mainly on account of severe landslides that have caused several mines in Peru to cancel or delay concentrate shipments. In addition, prices are rallying on expectations of a possible stimulus package being rolled out by the Chinese authorities and increase on oil prices is dragging all base metals. Outside of Peru, there are other signs of copper supply tightening. As an example, Chile said that its January output was off 14% vs last year-- the first noticeable decline in a long time. In addition there is talk that the nine large Chinese copper smelters that have previously agreed to 350,000 tons of cuts could expand the amount.

Reuters also cites CRU as saying that it is now looking for a loss of 610,000 tons of contained-copper this year and we suspect as well that the 4%-5% increase projected for global mine supply growth (by the likes of the ICSG) will be ratcheted down as well. Still, producers will have second thoughts about making cuts now that prices are racing higher.

London copper dropped on Tuesday, falling away from recent four-month highs after weak Chinese trade data damaged the outlook for metals and revived fears that a downturn in China's economy could derail global growth.

China's February trade performance was much worse than economists had expected, with exports tumbling the most in over six years and imports also sliding, days after top leaders reassured investors that the outlook for the world's second-largest economy remains solid.

Three-month copper on the London Metal Exchange had slipped 1.0 percent to $4,945 a tonne by 0732 GMT, adding to small losses from the previous session. Prices have dropped from four-month highs struck last week at $5,059 a tonne.

China's imports of copper fell 4.5 percent from month ago to 420,000 tonnes in February, customs data showed. "Imports are a little bit down, but is it a cause for concern? I don't really think so, given February with Lunar new year and a short month," said analyst Daniel Morgan at UBS in Sydney.

Metals had earlier found support after global oil markets jumped more than 5 percent on Monday, as producers sought to shore up supply, fanning hopes commodities prices may have bottomed out.

Prospects of dollar strength are also looming over metals. After a long wait for inflation to accelerate, U.S. Federal Reserve officials face a complex and possibly divisive debate over whether recent evidence of rising prices is strong enough to move ahead with planned rate hikes.

 



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Monthly Copper Bulletin-JAN16

MARKET COMMENTARY

Copper hit a fresh seven-year low of $4318 in Jan before recovering over the 2nd half. Meanwhile, various producers have been tallying up production totals for 2015 and giving guidance for 2016 and beyond. Judging the projections, a majority seem oblivious to the depressed pricing environment. For starters, Chile said it produced 5.79 mln tons of copper last year, a .2% increase from 2014. Output is expected to be flat this year before rising yet again in 2017, this time by about 3.1%. Peruvian output is expected to be up by a more dramatic 65% this year, as 10,000 tons of Las Bambas copper concs shipped out last month, the first installment of an expected 450,000 ton roll-out.

Neither of these trends is all that encouraging given that Chinese demand is off the boil, at least judging from the sluggish macro data and from what our physical customers are telling us. Surprisingly, this is not evident in the Chinese import data, which instead shows that refined copper intake hitting a record 3.68 mln tons last year, up 2.5% from 2014 levels. (Copper conc imports were also up 12.3% y-on-y).

According to INTL’s last report it suspects this metal is coming in more so on account of arb trading, stockpiling schemes or somewhat modified financing programs, as opposed to accommodating local demand. (Lower expected Chinese grid spending is theoretically another negative for this year, but they would not read too much into this, as even a lower dollar grid spend will buy more copper this year than it did a year ago). In terms of it outlook, they see a relatively steady $4450-$4750 trading range in Feb, as further dollar weakness will offer an element of support, as should the current Freeport-Indonesia dispute. Furthermore, an absence of Chinese traders on account of the NY break should prevent major moves in either direction.

London copper edged down on Monday after the dollar firmed following a mixed U.S. jobs report, with the start of a week-long holiday in China draining liquidity from the market.

U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but rising wages and an unemployment rate at an eight-year low suggested the labour market recovery remains firm.

Three-month copper on the London Metal Exchange had slipped 0.5 percent to $4,607 a tonne by 1341 GMT, extending 1.2-percent losses from the previous session. Prices on Thursday hit a one-month high at $4,720 a tonne.

The Shanghai Futures Exchange is closed for the Lunar New Year holiday and will reopen Monday Feb. 15.

Global markets have been in turmoil since the start of the year, with stocks and commodities prices reeling, eroding inflation and making central banks increasingly dovish - a trend that could continue with more weak economic data.

China's January exports may have fallen for a seventh month with factories still battling falling prices, but an expected jump in bank lending may underscore the government's bid to put a floor under the slowing economy. (Full Story)

Hedge funds and money managers cut a bearish position in copper to the lowest since early November, in the week to Feb. 2, U.S. Commodity Futures Trading Commission data showed on Friday.



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TCMB Currencies (18.06.2018) USD: 4,6568 - EUR: 5,472 - GBP: 6,2218 Fixing Currencies (18.06.2018) USD: 4,7226 - EUR: 5,4664 - GBP: 6,2485 Fixing Parities EUR / USD: 1,1575 - GBP / USD: 1,3231