September 21, 2022

Falling demand due to an ongoing manufacturing recession in Europe will lead to a global copper market surplus, thereby potentially weighing on prices into 2023, according to analysts interviewed by Reuters this week. Analysts from Citigroup believe a seasonal surplus will occur between December and March, pushing copper prices to $6,600/mt, a nearly $1,100/mt decline from the current LME 3M Select price. Similarly, Macquarie estimates that the market will swing to a surplus of 691,000 mt next year, compared to an expected deficit of 162,000 mt this year. Macquarie expects a surplus next year despite unchanged production, blaming the surplus wholly on lower demand.

Copper prices have already dropped significantly lower in recent months. The last trade on the 3M Select was $7,715.50/mt (7:00 AM CST), down almost $2,000/mt from the June 7 high of $9,805.50/mt. This could provide a better opportunity for end-users to hedge future needs into 2023 and beyond by buying swaps, as this strategy would establish a maximum copper price. Such positions are standard for consumer hedging; however, they can result in opportunity costs or cash costs if metal prices decrease. Please contact AEGIS for specific strategies that fit your operations. (9/21/2022)

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Price Indications

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AEGIS Insights

9/14/2022: AEGIS Factor Matrices: Most important variables affecting metals prices

8/31/2022: Will Chilean Production Issues Drive Copper Prices Higher?

8/24/2022: Chinese Aluminum Supply Issues Could Rally Prices

8/16/2022: Zinc Prices Are On The Rebound Due To Supply Issues

8/9/2022: Aluminum prices are finding support: Consumers can lock in lower costs in 2023 and beyond

9/21/2022: LME says no sign of metal offloading after report about Rusal

9/20/2022: Russian aluminium giant Rusal mulls selling directly on LME -Bloomberg News

9/20/2022: Europe upstages China as main driver for copper outlook

9/18/2022: China's August aluminium imports fall 19% on-year as domestic output rises

9/18/2022: Column: Zinc caught between weakening demand and sliding supply

9/15/2022: US Steel idles Indiana blast furnace

Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.