Copper price surge eases

The bull market on the non-ferrous metals markets appears to have come to a temporary end. After prices on the London Metal Exchange (LME) rose sharply in April and May – copper was quoted at times above US$ 11 000 – there were price corrections in June.

Analysts had been expecting this as the higher prices had little fundamental justification. Copper prices were boosted, at least in part, by speculative investment funds and the other non-ferrous metals then followed the upward trend on the LME.

Despite the current price reductions, metal prices overall remain high. By mid-June, the metal world had returned to more typical levels. Consumers such as the metal processing industry had been taking advantage of the price reductions to build up their stocks. This does not always work, as some scrap qualities are in short supply.

WEAK EUROPE

The situation in the European metal industry has not improved. Factories report that the order situation in the first six months of this year is around 20% lower than in the same period last year. The fact that the industry already had to deal with a weak order situation in 2023 makes the situation even more dramatic.

The metal trade was able to make a decent living through exports, at least in the first half of 2024. Nevertheless, many market participants find it a burden that the domestic industry in Europe has become significantly weaker as a buyer of metals than in previous years.

HISTORIC MOMENT

In May, during the heady pricing period, Fastmarkets noted that copper markets were in an historic moment with Chinese smelters paying premiums for raw material copper concentrate while selling their finished product at a discount.

The commodity analysts pointed out that copper concentrate, used for copper smelting, is priced according to treatment and refining charges (TC/RCs). Such charges usually fall amid tighter supply. ‘Fastmarkets’ benchmark copper concentrate TC/RC index fell into negative territory on 26 April, marking the first time the index traded as a negative number since Fastmarkets started to track the market in 2013,’ it said.

Read the full market update in our upcoming issue >>