Global copper market glut will depress prices

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.