Since April this year, copper prices have soared all the way due to the superposition of multiple factors. When the price of Lun copper was the highest, it was close to US $11100 / ton. However, since then, with the gradual mitigation of copper supply risk, this once popular metal futures market has ushered in cooling. However, the energy crisis will exacerbate the uncertainty of copper demand outlook in the future.
Codelco, a Chilean National copper company, proposed on Monday (October 11) to supply copper to European customers at a price of US $128 higher than futures premium / premium in 2022, increasing the European copper premium by 31%. This means that even when economic growth is facing headwinds, the world’s number one copper company still expects strong demand to continue. The company increased the annual copper premium by US $30 / ton, which is US $5 higher than the premium announced by aurubis, Europe’s largest copper producer / the world’s largest copper recycling company.
October 11 is the first trading day of the London Metal Exchange (LME) this week. A group of metal producers, consumers and trading companies gathered in London to study and decide on the supply agreement for the coming year. At a time when inflation and the energy crisis are raging and affect the growth prospects, rising freight rates will also push up the costs of suppliers such as Codelco.
A major risk faced by manufacturers is that the global economy has entered a stagflation period, the demand of consumer goods, construction and other industries has decreased, and the price of raw materials remains high. Even so, with unprecedented stimulus funds entering metal intensive renewable energy projects, manufacturers are aware of the risk that demand will exceed supply. Nexans, a cable manufacturer, has said it will expand copper recovery to prevent future shortages.
Previously, it was reported on Wall Street that in August this year, the workers of Escondida copper mine, the world’s largest copper mine in Chile, went on strike. During the strike negotiations, the workers mainly asked for a pay rise on the grounds of high copper prices and profits, while enterprises hoped to control labor costs in cyclical industries with rising input costs. Although since then, for example, Codelco’s andina copper mine finally reached a salary agreement with suplant union members, ending the three week strike at that time, easing the tension of copper workers in the world’s largest copper producer. However, this series of strikes once disturbed the global copper supply and further increased the copper price.
As of the issuance, London copper ukca rose 2.59%.
Post time: Nov-05-2021