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Due to escalating input costs, lower production volumes, and falling global prices, copper producers will face lower earnings for at least the next 12 months, according to Bloomberg’s summation of a report that Moody’s released yesterday. However, the ratings agency does believe that supply-chain issues in top producers Chile and Peru will limit price declines. Similarly, Moody’s believes that high energy and raw-material costs will hurt earnings and production for European zinc, aluminum, and nickel producers. They also believe that metals demand will weaken as economies throughout the world begin to slow. |
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Weakening metals demand has already pressured metals prices lower in 2022. For example, the LME Aluminum 3M Select contract is down nearly 21% in 2022, setting a new low of $2,198/mt for the year on Wednesday. End-users of aluminum (or other base metals) might utilize the recent price drop by applying hedges that provide upside price protection, such as buying swaps or call options, both of which would establish a maximum price. Such positions are standard for end-user 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. (9/23/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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Price Indications |
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Today's Charts |
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AEGIS Insights |
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9/21/2022: 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 |
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| Important Headlines | ||
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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 |
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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.
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