Copper: Supply setbacks push market into deficit – Commerzbank
Commerzbank’s Barbara Lambrecht notes Copper prices are rising again as ICSG data show a significant June deficit and a sharply reduced year‑to‑date surplus.
The International Copper Study Group data has revealed a significant June deficit in copper supply, coupled with a sharp reduction in year-to-date surplus. This is primarily due to weak mine output outside China and the Democratic Republic of the Congo, coupled with production issues in Chile and the DRC. Moreover, cancelled warrants on the London Metal Exchange (LME) are exacerbating supply concerns.
These factors have led to a tightening balance, supporting a more favorable price environment for copper. Prices on the copper market are on the rise again, with this trend being driven by the latest figures from the ICSG. The International Copper Study Group noted an undersupply of 85,000 tons in June, after adjusting for seasonality.
As a result, the surplus for the first half of the year has dwindled to just 32,000 tons. The situation is further complicated by China's copper production slowdown in July, and a Chinese mining company may have to downgrade its production forecast due to flooding in the DRC. Reports of cancelled LME warrants have also raised fears about a potential supply shortage. Although LME copper reserves have increased slightly, withdrawals have surged by over 50,000 tons.
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