London Metal Exchange copper prices
On July 13, copper for immediate delivery was quoted at $5,606 per metric ton on the LME (London Metal Exchange). Copper prices gained roughly 1% on a possible Greek-debt deal. Earlier this month, copper prices fell to a six-year low as discussions between Greece and other European Union nations seemed to hit a dead end. China’s stock market crash added to copper’s rout.
Copper prices have corrected
The previous chart shows the movement in spot copper prices on the LME. They hit a six-year low of $5,375 per metric ton on July 8 but have recovered almost 4% since then. Nevertheless, copper prices are down ~12% year-to-date.
The rout isn’t limited to copper. Other base metals have also taken a beating on weak global macro factors. Spot aluminum prices are trading below $1,700 per metric ton, while the benchmark iron ore prices are testing a decade low. Prices have recovered a bit in the last couple of trading sessions but remain much lower than they were at the beginning of the year.
Negative for copper producers
Lower copper prices negatively impact copper producers including Freeport-McMoRan (FCX), BHP Billiton (BHP), and Thompson Creek Metals (TC). Freeport, which is the second-largest copper producer after the Chilean-government owned Codelco, is a part of several leading ETFs. It currently forms 3.12% of the Materials Select Sector SPDR Fund (XLB) and 4.01% of the SPDR S&P Metals and Mining ETF (XME).
In the next part of this series, we’ll analyze how LME copper inventories are shaping up.