November 7, 2022

LME Copper is down about 2% this morning, as China will continue its “zero-COVID” policy, according to statements from government officials last weekend. Last Friday, LME Copper rallied up about 7% largely due to rumors that they would be relaxing this policy. However, those rumors were from unverified, non-government sources.  

Peruvian supply concerns could have also supported prices last week. Peru's Las Bambas copper mine is reducing production due to ongoing protests, according to company statements from last Thursday. If mine operations stop, it would potentially remove 2% of global supply, according to Reuters. The Las Bambas mine has been subjected to several disruptions this year, including one stoppage that lasted over a month. The residents who are protesting at the mine are demanding compensation for its usage. The Las Bambas mine, which is one of the world’s largest copper mines, produced 300,000 mt in 2021. At 2.2 million mt, Peru was the world’s second-largest copper miner in 2021, according to USGS data.  (Source: Reuters, Bloomberg)

AEGIS notes that China's COVID policy could remain supportive of copper prices. Likewise, supply cuts from Peru could also support copper prices. The LME Copper 3M Select last traded at $7,930.50/mt (7:00 AM CST) and is up 6.8% in November. Even with the recent rally, this still could be a good opportunity for end-users to hedge future needs into 2023 and beyond by buying swaps. 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. (11/7/2022)

Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. 

Price Indications

Today's Charts

AEGIS Insights

11/02/2022: AEGIS Factor Matrices: Most important variables affecting metals prices

10/05/2022: European Aluminum Smelters Might Have Negative Margins Through 2023

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

11/4/2022: China stocks notch trillion-dollar gain on hopes of reopening, better U.S. ties

11/4/2022: Analysis: China's markets clutch at economy reopening straws

11/3/2022: Alcoa sent three letters to the LME requesting action on Russian metal

11/3/2022: Blockades at Peru’s Las Bambas copper mine hit operations

11/2/2022: UK sanctions four Russian steel and petrochemical tycoons

11/1/2022: US HRC: Prices continue to fall, market weak

10/31/2022: China shows the LME there are still buyers for Russian metal

10/31/2022: LME Week: Nickel market looks for stability

10/28/2022: Ford North American sales fall sequentially

10/28/2022: Glencore cuts zinc output guidance after production drops 18% in nine months

10/27/2022: US Steel earnings, steel production drop

10/27/2022: Glencore to stick with Rusal's aluminium in 2023 -sources

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.