Copper Fundamental Forecast – September 5, 2016

Copper is up a few points at 2.082 but gains are limited by the stronger US dollar. Copper prices fell to their lowest level in two months on the London Metal Exchange Wednesday. Copper started the year bullish, but ever since prices have struggled near $5,000 per metric ton as investors seem unwilling to chase prices higher.

In Q1, China’s copper imports were running at record levels but for the past few months, figures appear smaller. In July, China imported 360,000 mt of unwrought copper and copper products. A year-over-year increase of only 3.4% and the fourth consecutive month in which imports have fallen on a monthly basis. Moreover, July imports are at their lowest level since August 2015.

Additional supply includes increased production from Freeport’s Cerro Verde mine and the ramp-up of the Chinese-backed Las Bambas mine in Peru, increased output at Vale’d Salobo mine and the

ramping up of Southern Copper Corp’s Buenavista mine in Mexico. Canada’s First Quantum Minerals also continues to proceed with the development of the Cobre Panama project, with full production expected in 2018, while BHP Billiton this week announced increased guidance at Escondido, the world’s largest copper mine by some margin.

Only 19 organizations retain investment grade ratings in the sector although Moody’s has more recently changed a number of companies’ outlook to positive, notably Anglo American thanks to its asset sales. But don’t expect the better operating environment to show up in base metal miners’ financials just yet says Moody’s:

The modest improvement in base metal prices and cost benefits from low oil prices and currency depreciation against the dollar will soften earnings degradation in 2016, yet base metals companies and those with exposure to the sector are likely to see earnings fall again year-on-year.

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 September 5, 2016

Government Bond Auctions

Date Time Country Auction

Sep 06 11:00 Austria Holds bond auction

Sep 06 11:30 UK 1.5% 2026 Gilt

Sep 06 11:30 Germany Holds I/L bond auction

Sep 07 10:30 Denmark Holds bond auction

Sep 07 11:03 Sweden Holds bond auction

Sep 07 11:30 Germany Eur 5bn 0% Aug 2026 Bund

Sep 08 11:00 Ireland Holds bond auction

Sep 08 17:20 Italy Announces details of bond auction