Supply concerns support copper despite bleak economic outlook
Copper prices rose on Tuesday, helped by low inventories, signs of improving demand in China and fears that sky-high energy prices could force smelters to cut output.
Investors remained cautious, however, with a global economic slowdown threatening to curtail demand.
Prices are up 16% from a low in mid-July, but they are still down 17% since the start of the year and have largely flatlined in recent weeks.
In official trading on Tuesday benchmark copper CMCU3 on the London Metal Exchange (LME) was up 0.3% at $8,050 a tonne.
Prices have held steady despite the U.S. dollar reaching close to 20-year highs, which makes metals costlier for buyers with other currencies, and falling global stock markets.
"Most of the selling has been done by now," said Saxo Bank analyst Ole Hansen, pointing to data that shows speculators have already adopted bearish positions.
Copper should rise to about $9,000 a tonne by the end of the year, he said.
High energy costs mean that without state support or price hedges, copper smelters in Europe would face losses of $2.7 billion, analysts at Bank of America said.
High power costs have already prompted temporary shutdowns at aluminium and zinc smelters in Europe.
Data on Tuesday showed that manufacturing has contracted in Europe this month and factory activity growth in Japan slowed.
But China, the biggest metals consumer, this week cut its benchmark lending rate and has moved to support its property market.
Yangshan copper import premiums reached a 10-month high of $112.50 on Friday and inventories in Shanghai Futures Exchange (ShFE) warehouses are near 13-year lows at 31,205 tonnes.
On-warrant inventories on the LME have also fallen to 72,250 tonnes from 121,200 tonnes at the start of July.
The premium on the LME for cash copper over the three-month contract has risen to about $60, suggesting tighter supply. CMCU0-3
LME aluminium CMAL3 was up 1.1% at $2,416 a tonne, zinc CMZN3 was down 1.2% at $3,455, nickel CMNI3 slipped 2.2% to $21,850, lead CMPB3 lost 0.5% to $2,004 and tin CMPB3 was 1.5% down at $24,100.
Comments
The
content
you are trying to access is only available to subscribers.
If you are already a subscriber, you can Login Here.
If you are not a subscriber, you can subscribe now, by selecting one of the below options.
For more information or assistance, please contact us at subscriptions@creamermedia.co.za.
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation