Global copper market glut will depress prices
Wednesday, January 28, 2015
Significance
Three-month copper futures stand 24% below year-earlier prices. The reasons for this slide are common to other commodities: a strong dollar, oversupply and falling demand in China, which consumes 45% of the world's copper.
Impacts
- Some copper producers in Zambia could shutter operations depending on the outcome of parliament's plan to triple mining royalites.
- Shanghai Clearing is likely to launch a renmimbi-denominated copper premium swap, allowing hedging of warehouse receipt pledges.
- Higher refining charges will boost margins for downstream operators, but hurt mining companies without smelters.
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