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Copper – the market overview for October 2015

27 October 2015
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In October the copper price stabilized at 5,200 US dollars per ton after 6 months of almost continuous decline. After the beginning of the year when the price of copper fell by about twenty percent, this appeasement is a textbook example of a "bear market".

 

This stabilization of the price of copper was influenced by certain factors:

  • in September, the mining giant Glencore PLC announced the closure of its two copper mines in Africa, which will reduce the world's production capacity by 400,000 tons per year
  • Chile has closed its largest copper mine - Collahuasi - annual copper production will be reduced by another 30,000 tons
  • Peru, the third largest copper producer in the world, declared a state of emergency in the area of ​​the mine Las Bambas, where three people were killed in the conflict between police and protestors
  • on 22 October Freeport-McMoRan announced that it will reduce the extraction of copper at the mine Sierrita (Arizona) by 50%, which is about 45,000 tons annually. They also pointed out the way they estimate the economic effects of total closure of the mine: "They are ready to do whatever it takes to ensure liquidity and generate a positive money flow "

 

Like all the other industrial metals, copper price decreases due to weak demand from China. So say all of the media, but is it really so? Some analysts believe that China is not to blame for everything. Comparing Chinese annual imports of refined copper in 2014-2015, the difference is negligible, and decrease of only 3.6% ... Of course, this is not the complete picture. Many factors affect the price of copper, especially the energy sector, which is also weakened outside China.

 
 
The average price of copper - October 2015 (LME $/t)

 

The current situation is actually walking on the edge of a chasm. China can still reduce its imports and thus cause rainy days for copper like those in 2009 ... In contrast, the stabilization of copper could be a force for growth rates ... Most market participants still believe that it can not be claimed with certainty that the worst is over.

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