July 13, 2022

Copper prices could continue downward in 2H 2022, according to a Goldman Sachs note from yesterday. The bank has cut its three-month price target to $6,700/mt, down from $8,650/mt, as a gloomy demand outlook could weigh on prices into Q3 and Q4. Strength in the USD has exacerbated the drop in copper prices and could remain a “headwind” until global economies show signs of improvement. Regarding demand, Macquarie echoed similar comments earlier this week, stating that Chinese end-users are not looking to stockpile copper.

So far, 2022 has been an ugly year for copper prices. The LME 3M Select contract dropped by 15.5% in 1H 2022 and is down another 11% this quarter (7:00 AM CST). As demand is expected to stay subdued, copper producers might consider hedges that provide downside price protection, such as selling swaps or buying put options, both of which would establish a minimum price. Such positions are basic for producer hedging; however, they can result in opportunity costs or cash costs if metal prices increase. Please contact AEGIS for specific strategies that fit your operations. (7/13/2022)

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Price Indications

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AEGIS Insights

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