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Yahoo
21-05-2025
- Business
- Yahoo
Trump's copper tariff threat still a lucrative bet for traders
By Hongmei Li, Pratima Desai, Lewis Jackson HONG KONG/LONDON (Reuters) -Unusually large shipments of copper to the United States are unlikely to abate as long as the threat of tariffs hangs over the market and price premiums for the metal on U.S.-based COMEX make deals profitable for traders and producers, analysts said. Since February, when U.S. President Donald Trump ordered a probe into potential new tariffs on imports of copper vital for electric vehicles, power grids and construction, prices of the metal on COMEX have soared. COMEX copper hit a record high at $11,633 a metric ton on March 26, creating a premium of more than $1,570 a ton against the benchmark contract on the London Metal Exchange. According to U.S. government data, copper imports in March amounted to more than 123,000 tons compared with around 58,000 tons in February and 76,000 in January. "We expect 250,000-300,000 tons of extra copper will be shipped to the U.S. over March-May because of the spread and amid the uncertainties regarding the tariff," said Sharon Ding, head of China basic materials at UBS Investment Research. Ding was speaking on Tuesday at a Shanghai Metals Market event during LME Week in Hong Kong. Some of the metal heading for the U.S. has been diverted from China, but much of it has come from LME-registered warehouses where copper stocks have dropped nearly 60% since the middle of February to 170,750 tons. The premium for copper on COMEX has fallen to $600 a ton, a level traders say is still high enough to make a lucrative profit by sending copper to the United States. "Anyone who could get any material into the U.S. was pretty highly incentivised to do so. I think that rolls on for a little bit longer. We're still at super-normal (premiums)," said Marcus Garvey, head of commodities strategy at Macquarie. UNUSUAL SHIPMENTS Typically, traders and producers with contractual commitments transport metal using container ships as the amounts are regular and relatively small. One container can hold up to 25 tons of metal. However, traders wanting to move quickly before tariffs are potentially imposed have been transporting metal using bulk carriers. Container ships stop along the route to pick up cargo and can take 40 days to reach final destinations, according to a logistics source, while bulk carriers sail directly to final destinations, cutting transit time to around two weeks. Data provider Kpler estimates 95,202 tons of copper transported on bulk carriers reached the U.S. in March and 127,539 tons in April, compared with around 44,000 tons in January and February. In the first half of May, 71,591 tons of copper arrived in bulk carriers, according to Kpler, which highlighted larger than usual volumes from Chile, alongside unusual shipments of 10,000 tons and 4,500 tons from Germany and Spain in March and April respectively. Germany and Spain do not typically export copper to the United States. "It's possible we'll see more atypical cargos in the second half of May," Kpler analyst Ben Ayre said. "While the COMEX price continues to run at a premium to the LME there's a strong incentive to land refined copper in the United States."
West Australian
20-05-2025
- Automotive
- West Australian
Surge in Chinese electric vehicle sales bodes well for battered local lithium miners
Electric vehicle sales in China rose 58 per cent year-on-year in April, a positive sign for struggling WA lithium miners with the battery commodity's price running low on juice. The April sales figures are 2 per cent higher than March's numbers and take the total year-to-date EV purchase growth in the Middle Kingdom up to 51 per cent. Retail discounts have driven the speedy growth, according to Morgan Stanley, but there could be headwinds on the horizon. 'Our China Autos team remain watchful for signs of sub-seasonal demand turning into a broader price war as order intake moderates,' Morgan Stanley stated. 'They note the Shanghai Auto Show last month failed to impress as some key EV launches had already occurred, and some highly anticipated models were absent with launch dates now in June or July.' Prices of the spodumene concentrate produced by WA miners to power electric vehicle batteries are yet to show signs of improvement. The prevailing price is currently $US665 a tonne, according to Shanghai Metals Market, down about $US150/t in the space of a month and continuing a broad decline over the past two years. A rapid rise in lithium mine output from African countries like Zimbabwe, Rwanda and Nigeria has partly fuelled the supply glut. Morgan Stanley believes there is still pain ahead but prices should improve to $US1330/t by 2030. 'Our commodities team have a balanced view and see upside capped as the cost curve moves lower, driven by cost cutting and supply growth coming through,' it stated. 'We think prolonged prices below levels required to support new projects could impact supply modelled to come online over the next few years.'
Reuters
15-05-2025
- Business
- Reuters
China has ample cobalt despite Congo ban, conference delegates say
SINGAPORE, May 15 (Reuters) - Chinese cobalt smelters have ample supplies of the battery-making material despite the export ban imposed by the world's top producer, the Democratic Republic of Congo, in late February, delegates at an industry conference said this week. Downstream users in China, the top consumer of the metal, have intermediate products stocks that will last between two weeks and six months, Shirley Wang, general manager at Shanghai Metals Market, told Cobalt Congress 2025 in Singapore. "Large-scale users in China are with six months of stocks, though small-scale companies, with half a month stocks, will have to buy from the spot market at higher prices,' Wang said on Thursday. Congo imposed its four-month export ban to address global oversupply and revive prices for the metal used in making batteries for electric vehicles and mobile phones. The ban has helped lift cobalt prices to around $16 a pound, from $10 at the end of 2024. Chinese traders are also well-stocked with cobalt metal, with total volumes equivalent to 12 months of demand, Wang said. Four delegates from Chinese smelters said on the sidelines of the conference that their cobalt supplies were steady and little affected by Congo's ban. One of the four delegates said the stockpiles may peak in June, since it typically takes four months for cobalt to reach Chinese ports from mines in Congo. Patrick Luabeya, head of Congo's regulatory agency for mineral substances, said on Wednesday the country may impose strict curbs on cobalt when the current export ban ends. "Our ban is to make sure that at the end of the day, supply meets demand, but we have noticed that supply has not been affected to consumers," Congo's mines minister, Kizito Pakabomba, said in an interview at the event. For 2025, cobalt oversupply is expected to persist, said Wang of Shanghai Metals Market, with total supply up 6% to 327,000 metric tons, driven by cobalt produced as a byproduct from nickel and copper mining. Wang expects cobalt demand this year of about 237,000 tons, up 0.3% from 231,000 tons last year. Oversupply is likely to persist until at least 2030, she said, with supply at 390,000 tons that year and demand at 264,000 tons. Indonesia, the second-largest cobalt producer, expects to double its production capacity by 2027 and has no plans to control supply, a senior government official said this week.
Reuters
30-04-2025
- Business
- Reuters
Record gold prices help keep China's copper smelters going despite losses
SHANGHAI, April 25 (Reuters) - Surging prices for gold and other byproducts are keeping China's copper smelters afloat and could fend off significant production cuts this year despite a key gauge of industry profitability forecast to slump even further into the red. China's copper smelting industry is in a deep funk as an ever-growing number of furnaces jostle for limited concentrate supplies. Smelting capacity is up a quarter since 2021 and is set to rise around 10% this year, even as mine closures overseas keep supplies of the crucial raw material tight. The fees smelters receive for refining ore, called concentrate treatment and refining charges (TC/RCs), are already negative and set to fall further, according to six traders and analysts. Negative TC/RCs mean smelters must pay miners or traders to process concentrate into metal, in effect paying their customers. However, smelters are unlikely to cut significant production despite dire TC/RCs because high prices for smelting byproducts like gold and sulfur are partially offsetting losses, they said. Record prices for gold are offsetting some of the losses for processing concentrate rich in gold, according to one trader, who said he had heard of one TC/RC deal at minus $80 per metric ton or minus 8.0 cents per pound. Smaller, older smelters without the advanced technology to extract gold and other byproducts are likely to struggle, however, because they only account for a small part of production, according to three sources. Cuts and closures at these facilities are unlikely to drag down Chinese copper output, they said. The copper concentrates TC/RC index hit a record low of -$34.71 per metric ton and minus 3.47 cents per pound on April 18, according to Shanghai Metals Market. But in a sign of how the industry is powering on despite months of negative TC/RCs, analysts at Mysteel consultancy expect refined copper output to grow 10% this year. The steady growth in refined copper output is underpinned by China's massive expansion of copper smelting capacity, estimated by Benchmark Mineral Intelligence (BMI) at 12.78 million tons this year, up 8% from last year and 25% since 2021. China's refined copper output declined only 0.5% year-on-year to 3.35 million metric tons in the first quarter, according to official data.
Reuters
25-03-2025
- Business
- Reuters
China copper prices flip into slight backwardation
March 25 - Copper prices in Shanghai have flipped into modest backwardation in anticipation of robust Chinese demand, as expectations that President Donald Trump will impose tariffs on the metal lure refined supply to the U.S. to profit from the price gap. The front-month April copper contract on the Shanghai Futures Exchange closed at 81,900 yuan ($11,277.88) per metric ton on Tuesday, 0.75% higher than the closing price of the September contract . Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. Backwardation occurs when the price of a near-month contract is higher than that of a longer-term contract, indicating concerns about current supply. "The current backwardation is minor, meaning it's not acute supply concern. The backwardation is there because current copper demand is pretty good in China," a copper trader said. Two other traders in China said the pricing dynamic is also driven by higher Chinese refined copper exports and copper smelters' maintenance in March due to scarcity of copper concentrate, which is refined copper's key raw material. China's customs data showed a 119% annual increase in refined copper exports for the first two months of this year. "A lot of copper has flowed to the United States, enticed by higher prices there, resulting in fewer imports; China also shipped more cargoes in the first two months of the year, and stocks continued to fall," said a fourth trader. The Yangshan premium , a closely watched indicator of China's appetite for importing copper, jumped by 114% from early March to $75 a ton, the highest since January 20, LSEG data showed. Meanwhile, stocks of refined copper fell by 4% on the week to 333,600 tons on March 24, which is 13.9% lower than the year before, a survey from consultancy Shanghai Metals Market showed. "There might be risk of short-squeeze in the Shanghai exchange later," the third trader added. The sources requested anonymity as they are not authorised to speak publicly. ($1 = 7.2620 Chinese yuan renminbi)
