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Market Briefing - September 4, 2009
Defying expectations for a correction before the end of the summer
season, copper prices remained strong throughout August, posting
a fresh high of $6,491/tonne on the 28th (the official 3-month price
actually touched the $6,500/tonne mark on that day) and averaging
$6,165/tonne over the month, up 18% on the July average. Although
prices have retreated from their highs in early September, the cash
quote remains comfortably above $6,000/tonne. Upbeat key economic
indicators, suggesting an imminent recovery in consumption for the
majority of the markets suffering declines to-date, against the
backdrop of tight production continue to support prices.
Regarding the former, we note that the second quarter results for
a number of key mature economies were better than expected and that
the consensus view now sees a potential move into positive territory
already in Q3 for many countries. This was augmented by continued
strength in China, where industrial production enjoyed double-digit
growth for a second consecutive month in July. On the supply front,
as discussed later in this section, in addition to the ongoing structural
tightness of copper production, fears of disruptions related to
industrial action have provided an additional boost to prices.
Despite the overall positive fundamental backdrop for copper going
forward, there is currently little evidence of a shortage of material
in the market. For instance, LME inventories grew by 17,825 tonnes
over the course of August, with a further 8,000 tonnes added in
early September. Moreover, with the exception of China, demand in
most regions to-date remains weak. Although, as discussed in the
Executive Summary, many of the forward-looking economic indicators
are improving, there has yet to be a significant pick-up in the
downstream copper semis sector.
> This article gives the introduction to our latest detailed
analysis on the market. To access a full version of a recent detailed
monthly report on the base metals markets plus a recent briefing
update, click on the links below.
> Base
Metals Market Briefing - December 9, 2008.
> Base
Metals Market Briefing Update - December 16, 2008.
Disclaimer:
Whilst every effort has been made to ensure the accuracy of the
information used in this document, GFMS Metals Consulting cannot
guarantee such accuracy and GFMS Metals Consulting does not accept
responsibility for any losses or damages arising directly, or indirectly,
from the use of this information.
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