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Bloomberg
Copper crackle set to be eased with more supply to China
(Bloomberg) – Chinese copper smelters struggling with a shortage of semi-processed materials are expected to see an influx of supply from South America, a sign that the tightness helping to supercharge the rally in the metal may ease . Large numbers of ships arriving at Chinese ports from Chile and Peru, the country’s main suppliers, as bottlenecks ease, according to IHS Markit senior shipping analyst Daejin Lee. The amount of concentrate expected to reach the Asian nation could climb nearly 60% from February’s volume, he estimated. “The narrative could go from a very tight supply due to port congestion and logistical difficulties, and even waves in Chile, to more easier sourcing,” said Ed Meir, analyst at ED&F Man Capital Market. London Metal Exchange copper fell the most since October on Friday after hitting a record high on expectations of a rebound in growth aided by government pledges to invest. in green infrastructure, will lead to a deficit. The narrowness of the concentrate market – due to low raw material inventories, high freight rates and logistical challenges – has already pushed Chinese processing costs to low levels for several years and raised concerns about production cuts that would further reduce the supply of metals. Expected rise in China after Lunar New Year, when processing fees have likely already bottomed out, Che Guojun, analyst at the state-backed researcher Beijing Antaike Information Development Co., has also come just like Chile. , the largest copper-producing country, reported its worst month of production since the start of pandemic lockdowns. In January, output fell 8.3% from the previous month to its lowest level since February of last year, according to data released by the National Statistics Institute on Friday. Copper fell 3.6 % to settle at $ 9,077 a tonne at 5:51 p.m. in London, the biggest loss since October. All other major metals fell on the London Stock Exchange, with tin falling the most since March. Global bonds stabilized as markets returned to more solid footing at the end of a week that saw the Nasdaq 100 slide. “Soaring interest rates are weighing on risk appetite with news suggesting that the supply of copper concentrate outside Chile and Peru could increase by nearly 60% in March,” said the impact that the “Easing cyclical winds may have on price action,” TD Securities analysts led by Bart Melek said in a note. pointed to signs of rising foreign exchange stocks as a bearish indicator for the market, even as investors continue to build up in copper. Stocks in London Metal Exchange warehouses have jumped the most since November in tonnage terms Wednesday and are heading for a second weekly increase. Stocks tracked by the Shanghai Futures Exchange hit their highest level in three months last week after a week’s vacation in China. more people were working from home, according to Meir. “When life gets back to normal, there will be more trips, restaurants, cruises and flights. The consumer is going to spend less money on household items and electronics, and things like that. I’m not saying demand is going to collapse, but you’re not going to see this crazy surge in demand for metals because everyone was stuck at home, ”he said. Analyst Colin Hamilton expects copper prices to fall over the next few months – some market watchers are predicting the rally is not over yet. Goldman Sachs Group Inc., BlackRock Inc., Citigroup Inc. and Bank of America are seeing copper return to all-time highs above $ 10,000 per tonne. Copper prices have consistently posted an all-time 11th monthly gain in February and more than doubled from their nadir in March. (Updates with metal prices in seventh paragraph) For more articles like this, please visit us at bloomberg.com the most trusted source of business information. © 2021 Bloomberg LP
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