Copper

[Ann]

February 2011 saw the peak price of copper, since then it has had a steady fall with no break back up through the overhead trendline unlike gold, silver and oil. Just a steady downward trajectory.

 

[tinhat]

I like the look of the 5 year, 1 year and 6 month copper charts at the moment. Copper broke out on the 12 month chart last night. Cup and handle formation on the 5 year chart? Is copper heading back up over US$3? I've been accumulating a couple of speculative copper plays over the past year (CZI and FND) but I am quietly sulking over my holding in TGS (in extended trading halt over debt and production problems, significant sovereign risk exposure in the DRC). Any hot tips in copper?

 

[notting]

OZL and SFR yesterday.
I was nibbling but missed SFR

Not this - HOT - it's a hot bed of Mongoloids.

 

[Ann]

Just interested in watching Copper by the month.

 

[tinhat]

There is a head and shoulders pattern forming on the monthly copper chart, which suggests copper might be headed down towards the support line in Ann's chart above.

Note that the left hand shoulder also forms part of the handle in the cup and handle formation that emerged in 2017 which suggested the move up.

 

[Ann]

There is a head and shoulders pattern forming on the monthly copper chart, which suggests copper might be headed down towards the support line in Ann's chart above.
Note that the left hand shoulder also forms part of the handle in the cup and handle formation that emerged in 2017 which suggested the move up.

G'day tinhat, mostly I don't see H+S resolving in a textbook manner unless they are right at the pinacle of a chart. However, in this case you may be right. I would like to see it fall and touch that rising support line. It would give me a lot of confidence it is on the way back up and I feel a touch and bounce would strengthen it for a good go at the overhead falling resistance line.

 

[tinhat]

G'day tinhat, mostly I don't see H+S resolving in a textbook manner unless they are right at the pinacle of a chart. However, in this case you may be right. I would like to see it fall and touch that rising support line. It would give me a lot of confidence it is on the way back up and I feel a touch and bounce would strengthen it for a good go at the overhead falling resistance line.

OK, I'm not much of a student of charting so always good to have some feedback on my observations.

 

[Ann]

We now know a lot more about the actual quantities of copper used in all forms of electric vehicles. My original figures were very conservative for HEVs and as BEVs were not on the scene back then, we now have a new metric. HEVs will disappear and BEVs will become the new normal, consuming about 4 times the amount of copper as an ICE (internal combustion engine) alternative.
What I did do in my first post in 2007 was to look at at how much copper would be needed to convert the entire car fleet to EVs by 2027, just to show the massive volumes of copper involved. (There was no way that our manufacturing base could achieve that, even if every vehicle manufactured since 2007 was an EV.)
WRT to the ducati quote, I never assumed that after the subprime meltdown there would be an immediate shift to a bull market of any sort. Commodity bulls are very few and far between - just look at oil and gold as examples. However, as the BEV market accelerates, there is every chance that a number of metals essential to EVs will stretch the supply chain such that in a flat world economy there will be areas of significant outperformance.
Over the next few weeks I will look around to see if the major copper producers have any data or specific reports on what they regard as probable.

Welcome back to Rederob, his insights into stuff that comes out of the ground is always well worth a read.

 

[rederob]

Welcome back to Rederob, his insights into stuff that comes out of the ground is always well worth a read.

Consensus forecasts for copper prices in 2019 are slightly higher. Fitch reckons $6900 versus $6550/tonne in 2018.

 

[Ann]

Consensus forecasts for copper prices in 2019 are slightly higher. Fitch reckons $6900 versus $6550/tonne in 2018.

Thanks Rob, that is very interesting. I have to confess I am a total Copper bull, so any info like that is delicious for my bias.

 

[rederob]

Thanks Rob, that is very interesting. I have to confess I am a total Copper bull, so any info like that is delicious for my bias.

Add this to your reading list.
Warehouse inventories look to be in for an interesting time this year and might cause a spike in copper prices if there are any major supply disruptions.

 

[Ann]

Add this to your reading list.
Warehouse inventories look to be in for an interesting time this year and might cause a spike in copper prices if there are any major supply disruptions.

Darn the "this" is not linking Rob. I don't think they have HTML here.

 

[Skate]

Darn the "this" is not linking Rob. I don't think they have HTML here.

Ann, the hyperlink..

http://www.icsg.org/index.php/component/jdownloads/finish/114/2898?Itemid=

Skate

 

[Ann]

Ann, the hyperlink..

http://www.icsg.org/index.php/component/jdownloads/finish/114/2898?Itemid=

Skate

Thanks Skate, but that didn't work for me either, I guess gremlins are at play here!

However, the web address worked for me. Looks like a great site to browse when I have a bit of time, thank you very much Rob. I will just remind myself with the link that works for me.
http://www.icsg.org/index.php/the-world-of-copper

 

[Ann]

Copper price approaches eight-month high

.........On-warrant LME copper inventories available to the market fell by 6,350 tonnes to 33,450 tonnes, the lowest level since August 2005.

Supply shortage concerns, a stronger Chinese currency and looser credit conditions have boosted sentiment in copper, said Saxo Bank's head of commodity strategy, Ole Hansen.

China imports of copper scrap fell 11.5 per cent year on year to 180,000 tonnes in January.

It was the first month that imports of 32 extra types of solid waste, including lower-grade scrap copper, were banned as part of China's crackdown on foreign rubbish....... More...

 

[rederob]

Copper decisively broke through $2.85/lb resistance on 18 February and is on its way to break all time highs.
I am looking at near term target at around $3.20 before next bit of consolidation.
However, with LME warehouses at 33,000 tonnes of "available" metal there might not be a chance to catch breath on the run north for longer than I would expect.

 

[Ann]

...and a monthly view of Copper.

 

[rederob]

Copper flirted with $3.00/lb on Friday as it heads north again.
LME open interest is now at 21,600 tonnes, so at present drawdown rate LME warehouses will have nothing available by end of March.
Things are looking good for equities strong in copper output.

 

[Ann]

Biggest Trading in Copper Options Ever Signals Supply Troubles

The biggest trading volume in copper call options on record signals supply troubles brewing in the market.

A spread trade worth $6.5 million was posted just after 7 a.m. on Comex in New York in a bet that the price of the metal used in wires and pipes will surge past $3.05 in a few months, from Monday’s settlement price of $2.909. More....

 

[Ann]

This months Chart for Copper seems pretty much the same as last months with just a small swerve away from the falling resistance. Perhaps slightly bearish?