Industrial metals: Copper price settled in the middle of the trading range

by David Fleschen

The bottlenecks in the power supply in China push one metal price higher (aluminum), another is burdened by them (nickel) and on the copper market, in turn, one does not yet really know about the dominating effect. Since mid-June, the copper price has been fluctuating mainly between USD 9,000 and 9,500 per ton. In recent days, it has been hovering mainly in the middle of this range. Industry service provider SMM has surveyed companies in the Chinese copper industry in the regions affected by power restrictions: According to the survey, copper processors are primarily feeling the effects of rationing. In the Guangdong region, some report having cut down shifts. However, even though SMM concludes that the demand side of the copper industry is more affected at the moment, it warns that rationing could also hit copper smelters, so a stronger spillover to the supply side cannot be ruled out.

Smaller price-supporting news from the supply side is also reported from other regions of the world: For example, there were production interruptions following roadblocks at one of Peru's largest copper mines, Las Bambas. Following an accident, production also had to be halted at a large nickel-copper mine in Ontario, Canada. And "force majeure" was reported for a mine in the US state of Utah. Even if these are only isolated incidents, the risk of "supply shortfalls" thus remains on the agenda. Against this background, market participants do not seem to want to fundamentally reposition themselves two days before the start of the "Golden Week" in China. Meanwhile, the chairman of the Chilean mining industry has expressed optimism for the long-term prospects on the copper market: After all, he said, medium-term copper demand is well supported by the global transformation process towards more climate protection, and the commissioning of new mines could provide relief.

Source: Commerzbank Research, Photo: Fotolia

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