As a member of the Hawthorne Park slot car club I would like to thank you and your company for sponsoring the Copper Braid Cup. We finally managed to run the last round of the event last night and after some very close racing the overall winner was Ted Martin. Pete Crane will be sending you a report and pictures of the evening but I just wanted to say my personal thank you. Malcolm Walker
For the last month the price of copper has stabilised around £6.80 / kg while bonded copper stocks slowly recover to over 200 kT
The global spread of the Covid Delta variant, and ongoing lockdowns have dampened expectations of a global economic recovery and continue to disrupt global trade.
As vaccines slowly become available to more countries Covid should become less of an economic issue but until enough of the world is vaccinated to supress Covid transmission there is always a risk of a new variant, either even more contagious or more deadly or both.
What does this mean for the future price of copper ?
Supply side is likely to remain resilient and copper producing and processing countries are more able than most to afford Covid vaccines. A bigger supply risk is probably ongoing drought conditions.
Demand side is likely to fluctuate as countries lock down in response to Covid outbreaks and there ae further trade disruptions. All eyes are on the UK at present as the first vaccinated country to open up despite a surge in infections.
The price of copper has nudged up to £6.66 / kg over the least week even though bonded stocks also increased to 169 kT.
With supply exceeding demand I expected the price to start falling, but the rapid rate of vaccination in the US and continuing economic growth in China is creating expectations of demand once again exceeding supplies.
Meanwhile Chile is experiencing a new wave of Covid infections, even though it has a successful vaccination programme using a vaccine from China. This may disrupt supplies from one of the worlds largest copper producers in the short term, but also illustrates the potential risk of vaccinations alone not stopping future Covid infection waves.
I’m still short on the price of copper and miners will be rushing to fill orders while the contract price is still over £6 / kg. Also, the larger the stocks before the price corrects the sharper the correction will be.
The price of copper is holding at £ 6.57 / kg as LME stocks recover to 114 kT, the first time they have been over 100 kT since January.
The copper supply chain are clearly maximising output to take advantage of the current historic high in the price of copper while demand has been cooled by the continuing impact of Covid on the global economy.
I expect the price of copper to stay high until stocks reach 150 kT and then to fall back to £5 kg as speculators unload there positions.
There is an uneasy balance of supply and demand at the moment with the price of copper holding steady at it’s elevated £ 6.50 /kg price and bonded stocks increase slightly to 84k.
For speculators the question will be whether the current elevated price is sustainable and whether they should double down on their investment or offload to secure their profits.
For miners and processors this is the time to max supply and their are potential off market deals to be done to secure long term supply contracts at historically high prices, especially with the global drive towards Electric Vehicles driving demand.
Users will be trying to increase prices to cover the increase in the cost of copper, both long term pricing and short term contracts. They can argue that the current high price is here to stay, knowing that if there is a fall in the price of copper they may be able to hand onto those price increases, whereas the final customer will be shopping around as much as possible to minimise price increases.
I also expect a shift away from average last month copper price based contracts, FIRM, to average next month’s copper price, VARIABLE, to shift the risk of copper price increases onto the user / end customer.
Can miners and processors increase supply to match demand ? Investment projects will have a good rate of return but can easily have a 5 or more year lead time. Also there is an ever increasing environmental restrictions on new copper projects.
Copper LME has held steady over the last month at £5.85 / kg while LME bonded stocks have fallen to below 100 kT.
Unless supply increases to rebuild stock levels the price of copper will increase further as dealers who have been holding off ordering for stock have no option other than to buy at the current, relatively high, price.
No dealer would want to be sitting on expensive stock if the price falls but unless supply side issues can be resolved then the current global shortage of copper will continue.
Speculation in copper futures is driving the LME price of copper up to levels not seen since 2011. A resurgence in COVID mutations is likely to dampen the global economy and ease pressure on the price of copper.
However, long term price stability will only happen if supply exceeds demand enought o rebuild physical stocks, and that could be hampered by a resurgence in virus outbreaks until there have been enough vacinations globally to bring the pandemic under control.
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