Copper takes base metals centre stage as prices keep heading north
Copper metal on the London Metal Exchange edged a little higher to $US6,533 ($9,178) a tonne at Thursday’s market close, up from $US6,527/t Wednesday, as lower output from a key producer in Chile and a weaker US dollar supported prices.
Copper has been a star performer within the base metals complex after posting a strong recovery from its market low of $US4,320/t in mid-March.
“The general trajectory over the next 18 months is an upwards one,” Capital Economics copper analyst Kieran Clancy was quoted as saying in a Reuters report.
The red metal is also benefiting from a slide in the US dollar, analysts said.
“Despite Chilean production recovering in recent months, the price has continued to climb, suggesting that the substantial weakness seen in the US dollar could be acting as the perfect tailwind for the orange metal,” DailyFX copper analyst Daniel Moss said in a report.
Antofagasta, one of Chile’s largest copper miners, said this week its copper output slumped 4 per cent to 177,700 tonnes in the June quarter, compared to the March quarter.
“During the quarter we have been running our operations with approximately two-thirds of our workforce on-site, with the remainder either quarantining or working at home,” chief executive Ivan Arriagada said.
The company has maintained its production guidance for 2020 at the lower end of its original target of 725,000 to 755,000 tonnes, provided no further COVID-19 interruptions occur.
Industry body the International Copper Study Group (ICSG) said in a report this week that world copper mine production dropped 3.5 per cent in April, its latest reporting month, due to COVID-19 shutdowns.
Copper usage also declined in the January-April period, by 2.5 per cent, leaving the market in surplus.
“In the first four months of 2020, the world refined copper balance, based on apparent Chinese usage indicated a surplus of 60,000 tonnes,” ICSG said.
ASX copper stocks have been riding the wave of higher prices.
Krakatoa Resources (ASX:KTA) said ground penetrating radar had detected several critical anomalies in its Bell Valley project in NSW that are associated with gold and copper mineralisation.
“We continue to build a convincing narrative for the drilling of deeper targets at Bell Valley, and doing so through considered, cost-effective exploration,” executive chairman Colin Locke said.
KTA shares zipped 10 per cent higher in morning trading to 11c.
Comet Resources (ASX:CRL) added 6 per cent to 1.7c as it gets ready to drill at its Barraba project in NSW after a geologist site visit confirmed significant historic copper mining in the area.
The drilling will target a strike of historically mined lodes at the Gulf Creek mine, which previously produced copper at an average grade of 5 per cent.
Comet noted that copper prices were trading at two-year highs and added that a €750bn cash injection from the European Union is expected to provide support for copper demand.
“This coupled with the intensity of copper usage in battery electric vehicles, plus renewable energy and other initiatives aimed at reducing carbon emissions from the transport and electrical generation industries, provide further future upside for copper demand,” the company said.
NSW copper producer Aeris Resources (ASX:AIS) was steady at 4.2c on a 10 per cent rise in copper production at its Tritton mine to 6,672 tonnes in the June quarter.
Company guidance is for copper in-concentrate production to touch 23,500 to 24,500 tonnes in the 2021 financial year.