For the Quarter Ending September 2022
South America
During the third quarter of 2022, Copper Rod prices witnessed a mixed trend in the South American market. As per market players, Copper prices surged in August after tumbling in July amidst fears of the global recession. However, prices were down by roughly 10% in August from the same month of the preceding year. Prices did not see significant changes in September. According to market participants, higher average prices in August and September were driven by increased Chinese imports of the metal, as the Asian heavyweight capitalized on the sharp drop in prices from early June to mid-July to increase purchases. Furthermore, Chilean copper output fell 8.6% in July, likely keeping global supply tight and supporting prices. In recent months, Chilean production has been hampered by poor ore quality, water shortages, and lower refining rates. Finally, workers at the world's largest mine, Escondida, announced a strike in early September. Thus, the price of Copper Rod (C110-1 inch) for FOB Alabama Port (USA) settled at USD 15830/MT.
Asia Pacific
Copper Rod prices showcased a mixed price movement during the third quarter of 2022 as overseas copper mines are being disrupted, and a power outage has been affecting regional copper production; however, demand remained low. Investors remained cautious, with a global economic slowdown threatening to dampen demand. According to market participants, copper prices rose due to lower inventories, signs of improving demand in China, and fears that sky-high energy prices will force smelters to cut output. Since August, refined domestic copper production has hampered electrolytic copper production, high temperatures in many parts of the country, and growing concerns about sulfuric acid storage expansion. Domestic copper inventory remained high, and domestic mine supply was limited. Suppliers claim that most of the purchasing has been completed, and buyers have taken a bearish stance. As a ripple effect, the Copper Rod (20 mm) prices for FOB Shanghai (China) settled at USD 5810/MT.
Europe
In the European market, Copper Rod prices witnessed a rising trend amidst limited product availability during the third quarter of 2022. According to market participants, high power costs have already caused temporary shutdowns at European aluminum and zinc smelters. The rise in interest rates in advanced economies also weighs on commodity prices. However, given the low inventory levels in central warehouses, market participants believe that base metal prices are unlikely to fall further in the near term. At the same time, low prices put pressure on the margins of domestic base metal producers, and user industries benefit. Furthermore, because of the rising coal price, players will face cost pressures when purchasing coal from the market. Therefore, the discussions for Copper Rod (25 mm) prices for FOB Hamburg (Germany) settled at USD 10420/MT.
For the Quarter Ending June 2022
South America
In South America, Copper Rod prices witnessed a plunging trend during the second quarter of 2022. According to market participants, declining Chilean production activity and variance with locals near copper mines in Peru have worsened supply crises. Due to water scarcity in Chile's Antofagasta and Atacama regions, manufacturers must rely on seawater and desalination plants. In addition, Chilean state-owned copper mining company Codelco announced the closure of its Ventanas smelter, which had been closed for maintenance and operational adjustments following a recent environmental incident that sickened dozens in the region. Meanwhile, the Peruvian copper mine Las Bambas has been closed for more than two months, resulting in the layoff of approximately 3,000 miners. The suspension has disrupted Minerals and Metals Group's (MMG) supply of Copper raw materials and caused delays in delivering long-term Copper concentrate orders to some Chinese smelters, potentially affecting some Chinese smelters' long-term bookings in the second half of the year.
Asia Pacific
During the second quarter of 2022, Copper Rod prices in the Chinese market were on the plunge. The continued domestic pandemic in April reduced market demand, hampered logistical transportation, and noticeably decreased operating rates for downstream processing companies. Investors were concerned about stagflation as US stocks declined, the US dollar index increased, and the month of May saw both. Additionally, the current domestic epidemic keeps the demand for copper low, and the market is unenthusiastic. The low global copper inventory has eroded the support for copper prices. Fundamentally, concentrate supply is adequate, spot processing costs are consistent, and demand is moderate. Multiple spot transactions of copper ores between smelters and mines occurred in the market, with the traded Copper concentrate treatment charges (TC) and traded sources scheduled to ship in August and September. Domestic smelters and merchants primarily traded in mixed and non-standard copper ores.
Europe
The European copper Rod market declined due to low demand and few regional transactions despite inflationary pressures and supply constraints. Market players claim that the argument for the Federal Reserve's strong stimulus to reduce price coercion has been strengthened by mounting inflationary pressures in the US, escalating concerns of a recession. Administrators are rattling risk assets throughout markets as they adopt a more hawkish attitude. Fears of a recession, according to traders, are impacting pricing. Midway through the second quarter, supply and inflation are still constrained. However, as worries about a downturn in industrial activity across nations and a decline in Chinese demand rise, copper prices are declining. At the June meeting, the European Central Bank revised its projection for inflation and announced plans to begin a slow and persistent increase in interest rates. The assets were under pressure from the hawkish indicators.
For the Quarter Ending March 2022
South America
In South America, the Copper Rod prices increased primarily due to the halted mining activity, disrupted supply chain, and COVID-19-related restrictions. Due to the impact of COVID-19 in January and February, labour shortages severely impacted the development and mining sectors. The bullish trend for Copper is centered on sticky inflationary pressures, a lingering copper supply deficit, and slowing economic activity in the post-COVID period. Phoenix-based Southern Copper Corporation cited that the protest-related shutdown of one of its Peruvian operations resulted in a significant decrease in copper production during the first quarter. According to the firm, roughly 480 protesters seized the facilities at the Via Blanca reservoir in late February, cutting off the water supply to the approximately 4,800 people who live at its Cuajone operation. Another group had shut down a railway line near the mine. Due to the actions, the Peruvian government declared a regional state of emergency, and the mine was closed until late April. Thus, the mine's output dropped in the first quarter due to the shutdown.
Asia
In the Asian market, Copper Rod prices witnessed a rising trend owing to lower inventories, stretched supply chains, Chinese muted demand, and the Russia-Ukraine conflict, all impacting the Copper Rod during the first quarter of 2022. The war's aftermath exacerbated ongoing supply constraints in the Asian copper market, raising concerns about supply disruptions due to international sanctions imposed on Russia. China, the world's largest copper consumer, saw an upsurge in COVID-19 cases in Q1 and enforced a new lockdown policy to combat the infection. Additionally, this has created significant headwinds for demand, as construction activity has slowed and consumer spending hampered during the initial three months of 2022; COVID-19-related restrictions limited mine production in several countries. As a ripple effect of limited inventories amidst robust demand, Copper Rod prices skyrocketed.
Europe
During the first quarter of 2022, the Copper Rod prices witnessed an upswing trend due to the higher inflation rate and rising energy and fuel prices amidst the combat between Eastern European markets. The copper market remained tight as supply-side cost-push inflation persisted. Additionally, prices have remained elevated due to the lower inventories and a volatile geopolitical environment. The Russia-Ukraine war and its repercussion, particularly on raw materials and logistics, exacerbated ongoing supply tightness in the Copper market amidst worries of supply disruptions due to international sanctions rolling out against Russia, which double folded the impact on copper prices. As per market players, the rising inflationary pressures persist in Q1 2022, and a conflict between Russia and Ukraine exacerbated the situation, negatively impacting metals, energy, and grain exports.
