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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Copper Prices Ignited By Chinese Demand Growth

A couple of very important notes for the copper market the last few days. Which have the price for the red metal once again showing unexpected strength.

The first was a major headline across mining news outlets on Wednesday: the sudden resurgence of copper imports into the key market of China.

Reuters reported that China’s March copper imports actually hit an all-time high — at 570,000 tonnes for the month. Representing a notable 39 percent increase from the same month in 2015. Related: U.S. Oil Supply To Fall Faster Than Expected

That was enough to lift China’s total Q1 copper imports to 1.43 million tonnes — an increase of over 30 percent as compared to the year-ago period.

That news got the market excited, lifting the copper price off the $2.10 per pound mark where it had been languishing — and back toward $2.20. Stemming a decline in the price that had been in motion since late March.

And even as all eyes were on the copper price, another less-reported news item emerged in Australia. Showing that some buying action may also be ahead when it comes to copper stocks. Related: Saudi Arabia Steps Up Drilling Despite Downturn

That was a report from the Sydney Morning Herald that several Chinese miners are accelerating their hunt for copper assets. With the paper interviewing officials from PanAust — a former ASX firm, now controlled by Chinese conglomerate Guangdong Rising Asset Management — who said they’ve been given a mandate to go out and acquire copper projects globally.

PanAust said that it has been in “several” data rooms lately looking at potential copper projects. Suggesting that we could see this China-backed firm pull the trigger on an acquisition soon. Related: Is The Golden Age Of Gas Nothing More Than A Bubble?

And that’s not the only Chinese company apparently in the hunt for new projects. With the same report also noting that China Molybdenum Company is similarly seeking global copper assets for purchase.

All of which suggests that interest in copper is stronger than many investors believe right now. And we could see some big purchases coming — both in physical metal and in mines and development projects.

Watch for announcements on both.

Here’s to a copper bottom

By Dave Forest

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  • CK on April 30 2016 said:
    Is it possible the Chinese would rather have copper than yuan currency?

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