• 4 minutes Permian already crested the productivity bell curve - downward now to Tier 2 geological locations
  • 12 minutes Western Canada Select price continues to sink
  • 18 minutes Starvation, horror in Venezuela
  • 1 hour WTI @ 67.50, charts show $62.50 next
  • 3 hours China still to keep Iran oil flowing amid U.S. sanctions
  • 24 mins How To Explain 'Truth Isn't Truth' Comment of Rudy Giuliani?
  • 2 hours Is NAFTA dead? Or near breakthrough?
  • 5 hours China goes against US natural gas
  • 7 hours Japan carmakers admits using falsified emissions data
  • 5 hours Saudi PIF In Talks To Invest In Tesla Rival Lucid
  • 4 hours Corporations Are Buying More Renewables Than Ever
  • 4 hours Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 21 hours Hey Oil Bulls - How Long Till Increasing Oil Prices and Strengthening Dollar Start Killing Demand in Developing Countries?
  • 3 hours Saudi Fund Wants to Take Tesla Private?
  • 2 hours Batteries Could Be a Small Dotcom-Style Bubble
  • 2 hours Are Trump's steel tariffs working? Seems they are!
Iran’s Latest Tactic To Save Market Share

Iran’s Latest Tactic To Save Market Share

Iran cut oil prices for…

Oil Demand Growth Starts To Weaken In Asia

Oil Demand Growth Starts To Weaken In Asia

Oil demand from Asia’s key…

A Key Indicator In The Copper Market Suggests The Bottom Is Near

Open Copper Mine

Big news in the copper market this week, with the government of Peru saying it has now passed Chile as the world’s top supplier of copper to China.

That follows an 81 percent increase in Peru’s China-bound exports during January to April of 2016.
But despite that change in the rankings, Chile still remains the world’s most critical spot when it comes to copper production. And this week we got one very important number on the state of the mining industry here.

That’s cash costs for copper production. With Chilean government agency Cochilco releasing its “Cash Cost Observations” report for the full-year 2015.

Cochilco gathered data from the 19 largest copper mining operations across Chile — representing about 90 percent of the country’s total output, and looked at the average direct, or C1, costs for producing a pound of copper.

The final average for 2015 came in at $1.532 per pound - up slightly from the $1.524 per pound cash cost that Chilean producers saw in 2014.

That’s a very important figure for a few reasons. First, it shows that producers have not yet begun to benefit from cost deflation in the mining sector — with overall production costs still continuing to rise during the past year.

Related: Does This $2.2 Billion Deal Reveal Where The NatGas Sector Is Going?

However, the pace of cost inflation was much slower than previous years. Suggesting that 2016 could finally see a fall in production costs for the industry.

This cash cost figure is also a critical benchmark for copper market observers to keep in mind. Especially given that copper prices have fallen notably over the last few weeks — down nearly 10 percent since late April, to a current level around $2.10 per pound.

Related: Oil Chugs Higher But Slips On Gasoline Build

That’s had some analysts concerned about just how far copper could fall. And in that regard the $1.50 mark looks like a potential floor for prices — given that these numbers show most of the producers in the world’s top mining nation would be broke at that level.

All of which suggests we could see more weakness, but not that much more. It’s still not cheap to produce copper — and the world still needs metal. Watch for prices to track these supply and demand dynamics.

Here’s to a copper bottom,

By Dave Forest

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News