{"id":610,"date":"2019-03-14T11:49:43","date_gmt":"2019-03-14T11:49:43","guid":{"rendered":"http:\/\/commodity-trading.campus.local\/commodity-trading\/?p=610"},"modified":"2019-03-14T11:49:45","modified_gmt":"2019-03-14T11:49:45","slug":"bulletin-1-the-copper-suffers-from-poor-economic-prospects","status":"publish","type":"post","link":"https:\/\/campus.hesge.ch\/commodity-trading\/bulletin-1-the-copper-suffers-from-poor-economic-prospects\/","title":{"rendered":"Bulletin 1-The Copper suffers from poor economic prospects"},"content":{"rendered":"\n

The copper price exchanged on the London Metal Exchange suffered over the\nweek as the prospects of the world economy have darkened.<\/p>\n\n\n\n

This turbulence zone is due to the downward revision of growth prospects in\nthe Euro area and the Chinese\u2019s data on exports, which shows a decline. The\nequation is complicated for Beijing, which is still in the midst of a trade war\nwith Washington. <\/p>\n\n\n\n

In dollars, Chinese exports fell by 20.7% over one year in February,\nwhile they had increased the previous month announced the customs\nadministration. The imports also continued to fall, dropping by 5.2% which was\nstronger that January. <\/p>\n\n\n\n

It is important to remain that the metal market is particularly\nvulnerable to these figures, as China is the world\u2019s largest importer of raw\nmaterials.<\/p>\n\n\n\n

Indian Copper Smelter<\/strong><\/p>\n\n\n\n

Vedanta Ltd. (Mumbay\nbased company) was hardly impacted when an indian court refused to authorised\nthe resumption of the company copper\u2019s smelter with a capacity of 400\u2019000\nmetric tons a year which reprensent 40% of the country capacity. Indian imports\nof refined copper jumped, even though the country was already a net importer of\nrefined copper.<\/p>\n\n\n\n

This decision also\nimpacted the copper price in London which started to increase. The demand rise\nand put pressure on the supply side.<\/p>\n\n\n\n

On the other side,\nimports on concentrate copper slump as the country has no capacity to refine\nit. That would mark the lowest imports in the last 13 years.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Price <\/strong><\/p>\n\n\n\n

 Price:\nUSD$\/Tonne<\/em><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

The chart below shows\nthe copper price evolution for 1 month (Feb \u2013 March). We can notice a huge\nincrease from mid-February to the 1st<\/sup> of March. The increase is\nprobably due to the low stocks and important Chinese demand. LME warehouses reached 139,500 tonnes, close to the 10-year low of\n122,500 tonnes in December 2018.Nevertheless, from the beginning of march,\nthere is a small decrease due to some rising inventories and drop (-0.5%) in\ncopper premium grade-a (Shanghai). The stock in LME warehouses rose to 120 075\ntonnes from 116 872 (lowest since 2008). In term of supply, the market seems to\nbe undersupplied. The existing mines are already operating at full capacity and\ntherefore cannot at the moment respond to tighter markets.<\/p>\n\n\n\n

Forward curves<\/strong><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

The forward curve below\nshows the state of the market today. We can notice a small backwardation from\nMarch to April 2019. It means that there is an undersupply situation (Demand\n> Supply). The market is relatively a bullish (strong) market. However, from\nApril to May 2019, there is a kind of \u201cincertainty\u201d. Finaly from May 2019, the\nsituation is changing for a contango.<\/p>\n\n\n\n

 Recommandation for the future<\/strong><\/p>\n\n\n\n

Investors that want to profit from the move in copper prices should buy\nlong-dated copper futures contracts as we are heading to a contango situation\naround May 2019.<\/p>\n\n\n\n

Sources<\/strong><\/p>\n\n\n\n

https:\/\/www.lme.com\/en-GB\/Metals\/Non-ferrous\/Copper#tabIndex=2<\/a><\/p>\n\n\n\n

https:\/\/uk.reuters.com\/article\/global-metals\/metals-low-stocks-propel-copper-prices-to-7-month-high-idUKL3N20F366Inventory:<\/a><\/p>\n\n\n\n

https:\/\/www.reuters.com\/article\/global-metals\/metals-copper-flat-set-for-weekly-decline-on-supply-pressure-idUSL3N20V0TZ<\/a><\/p>\n\n\n\n

http:\/\/marketqview.com\/forwardcurvechart.php?ID=18&TYPE=Price<\/a><\/p>\n\n\n\n

https:\/\/www.thestreet.com\/investing\/copper-14890346<\/a><\/p>\n\n\n\n

https:\/\/www.bloomberg.com\/news\/articles\/2019-02-18\/india-top-court-refuses-to-allow-vedanta-to-restart-copper-plant<\/a><\/p>\n\n\n\n

https:\/\/www.bloomberg.com\/news\/articles\/2019-03-12\/for-xi-jinping-a-vexing-question-can-donald-trump-be-trusted<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The copper price exchanged on the London Metal Exchange suffered over the week as the prospects of the world economy have darkened. This turbulence zone is due to the downward revision of growth prospects in the Euro area and the Chinese\u2019s data on exports, which shows a decline. The equation is complicated for Beijing, which … <\/p>\n

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