• 3 minutes "Biden Is Running U.S. Energy Security Into The Ground" by Irina Slav
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 9 minutes "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 11 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 18 hours Energy Armageddon
  • 8 hours "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 8 hours Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 5 days "Forget Oil, The Real Crisis Is Diesel Inventories: The US Has Just 25 Days Left" by Zero Hedge - 5 Stars *****
  • 5 days "The Global Digital ID Prison" by James Corbett of CorbettReport.com
  • 5 days "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 5 days The Federal Reserve and Money...Aspects which are not widely known
  • 2 days Is Europe heading for winter of discontent with extensive gas shortages?
  • 6 days Goldman Betting on Cryptocurrencies
  • 9 days Сryptocurrency predictions
  • 14 days Putin and Xi Bet on the Global South
Ag Metal Miner

Ag Metal Miner

MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends,…

More Info

Premium Content

Something Interesting Is Happening In Copper Markets

There is a sizeable arbitrage window between COMEX and the LME copper price, prices that would normally move in relative harmony. The underlying cause, Reuters suggests, is imbalanced inventory.

In this respect, copper is similar to more extreme positions for aluminum and zinc. The U.S. is short of physical inventory relative to the LME. Even LME inventory is skewed to Asian rather than European warehouses, as we reported last week when looking at the aluminum market.

Realization of that squeeze is what was probably behind a sharp reduction in short positions on COMEX held by money managers over the last couple of weeks. Short positions fell from nearly 45,000 contracts in June to just over 22,000 lifting the net collective long balance to over 46,000 contracts as markets adjusted to the realization the U.S. is a lot tighter than believed. A physical delivery premium could be emerging for copper as we have seen leading aluminum price rises all this year.

Copper consumption on the rise

The reason is not hard to see.

According to the Reuters report, Citi estimated that apparent U.S. copper consumption jumped by 22% year over year in January-May. The country needs to lift imports by 80,000-90,000 metric tons per month over July levels for the arbitrage with London to normalize.

Meanwhile, copper scrap exports are up. Higher-grade copper scrap is pouring out the country, mainly to China. China imported 104,000 tons in the first half of this year, up from just 31,000 tons in the same period last year.

Related: Oil Prices On Track For Worst Weekly Loss Since March

Due to China’s change in import regulations, this is all relatively higher-purity scrap — 80% Cu or higher — metal that would otherwise have served the domestic market. In total, China imported some 821k tons, up 91% on a year before, similarly sucking metal from the rest of the world and pushing consumers towards greater uptake of refined metal.

Change of the tide?

Looking forward, Reuters suggests the tide is flowing in the U.S.’s favor.

Demand is easing in China as the recovery normalizes. It is possible more metal, scrap, and refined, could be available for U.S. consumption in the second half of the year.

But it will take more than a cooling China consumption to improve U.S. inventory levels. Chile, in particular, will need to find additional supply. Competition for that supply will incur price rises, as Europe and Japan also post recovering demand.

With the potential for strike action in Chile this month, maybe copper’s days on the sidelines will prove temporary — the money managers’ bets suggest so.

By AG Metal Miner

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News