Copper Prices Up Again, Poised To Hit Previous Highs
Sina Soleymani | Jun 06, 2018 07:03PM ET
Weaker dollar index and supply concerns caused Copper prices rise again to hit previous highs at 7232 $/T during this week.
aAfter a short-term hike, dollar index decline helped metal markets to revive and gain strength, copper prices were also affected limitedly . US dollar weakened after a while and fell below 94 again, giving hope to investors for another uptrend rally in metal markets.
Global copper market will face supply obstacles during 2018 due to mine closures and labor protests, which will affect supply side. One of the copper giant mines, The Indian Vedanta, which had one of two major Indian copper smelters and had 400,000 tonnes of cathode copper output, shutdown due to protests and environmental laws. With global growing demand in the last few years, to achieve production targets Chilean copper mines should run at full capacity. However, production levels are much below the scheduled level due to mine disruptions and closures and technical problems.
Besides, after the ban on using copper scrap in China, recent tighter restrictions that take action on June from the Chinese central government on blister copper producers, which use copper scrap as raw material, has impacted operations across copper processing plants. These tighter restrictions will amplify supply concerns among investors and domestic markets and push the prices up to 53320 yuan per metric tonne on Chinese markets. There is a price divergence between LME Copper prices and Chinese copper scrap prices during the last 2 months. While copper prices rose on LME, scrap prices fell, which means probably more scrap consumption in the near future and also higher scrap prices!
Another reason which has considerable impact on copper markets is labor negotiations at the world's largest copper mine in Escondida, Chile. Chilean mine workers union proposed a $34000 per worker bonus and BHP will decide whether to accept or decline the proposal in 7 days.
Current price levels are so important to both investors and traders, if copper prices breach and pass previous the high at 7300 $/T, it can probably hit new tops at 7800 $/T and 8500 $/T in 2018 which would be its highest level since 2012 and copper markets would post a new record of 3 consecutive years of growth.
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